BANK OF AMERICA, N.A. (INDIA BRANCHES)

BANK OF AMERICA, N.A.(INDIA BRANCHES)(Incorporated in U.S.A. With Limited Liability)

Economic & Political Weekly EPW july 28, 2012 vol xlviI no 30 1

Auditors’ report on the financial statements of Bank of America N.A. India Branches under Section 30 of the Banking Regulation Act, 1949.

The Chief Executive OfficerBank of America N.A. India Branches

1. We have audited the attached balance sheet of Bank of America N.A India Branches (‘the Bank’) as at 31 March 2012 and the related profit and loss account and the cash flow statement annexed thereto for the year ended on that date. These financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit of the Bank and its branches in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles and significant estimates made by the management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

3. The balance sheet and profit and loss account have been drawn up in accordance with the provisions of section 29 of the Banking Regulation Act, 1949 read with the provisions of sub sections (1), (2) and (5) of section 211 and sub section (5) of section 227 of the Companies Act, 1956.

4. In our opinion, and to the best of our information and according to the explanations given to us, the said accounts give the information required under the Banking Regulation Act, 1949, and the Companies Act, 1956 in the manner so required for banking companies and give a true and fair view:

– In the case of balance sheet, of the state of affairs of the Bank as at 31 March 2012; – In the case of the profit and loss account, of the profit for the year ended on that date; and – In the case of the cash flow statement, of the cash flows for the year ended on that date.

5. Further in our opinion the accompanying financial statements dealt with by this report comply with the Accounting Standards, referred to in sub section 3(C) of Section 211 of the Companies Act, 1956, to the extent they are not inconsistent with the accounting policies prescribed by the Reserve Bank of India.

6. We further report that:

a) we have obtained all information and explanations which to the best of our knowledge and belief, were necessary for the purpose of the audit and have found them to be satisfactory;

b) the financial accounting systems of the Bank are centralised and therefore, accounting returns for the purpose of preparing financial statements are not required to be submitted by the branches;

c) the transactions which have come to our notice have been within the powers of the Bank;

d) in our opinion, the Bank has maintained proper books of account as required by law insofar as appears from our examination of the books;

e) the balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with the books of account;

f) in our opinion, and to the best of our information and according to explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required for banking companies and guidelines issued by the Reserve Bank of India from time to time; and

g) the requirements of section 274 (1) (g) of the Companies Act, 1956 are not applicable considering the Bank is a branch of Bank of America N.A. which is incorporated with limited liability in the United States of America.

For B S R & Co. Chartered Accountants Firm’s Registration No.: 101248W Sd/- N Sampath GaneshMumbai Partner28 June, 2012 Membership No: 042554


july 28, 2012 vol xlviI no 30 EPW Economic & Political Weekly2

BALANCE SHEET AS AT MARCH 31, 2012

This is the Balance Sheet referred to in our report of even date For B S R & Co. For BANK OF AMERICA, N.A. – INDIA BRANCHES Chartered Accountants Firm Registration No. 101248W Sd/- Sd/- Sd/- N Sampath Ganesh Kaku Nakhate Kumar ShahPartner Chief Executive Officer Chief Financial OfficerMembership No: 042554

Mumbai: June 28, 2012 Mumbai: June 28, 2012 Mumbai: June 28, 2012

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2012

Year Ended Year Ended March 31, March 31, 2012 2011 Schedule (Rs. '000) (Rs. '000)

I. INCOME Interest earned 13 11,131,212 7,252,873 Other income 14 5,078,777 5,809,858

TOTAL 16,209,989 13,062,731

II. EXPENDITURE Interest expended 15 4,238,846 1,975,332 Operating expenses 16 4,054,998 3,585,313 Provisions and contingencies 17 2,661,557 3,275,732

TOTAL 10,955,401 8,836,377

III. PROFIT Net profit for the year 5,254,588 4,226,354 Profit/(loss) brought forward – –

TOTAL 5,254,588 4,226,354

IV. APPROPRIATIONS Transfer to Statutory Reserves 1,313,647 1,056,589 Amount retained in India for meeting Capital to Risk-weighted Asset ratio (CRAR) – – Transfer to Revenue and Other Reserves – 3,169,765 Balance carried over to Balance Sheet 3,940,941 –

TOTAL 5,254,588 4,226,354

Significant accounting policies and notes to the Financial Statements 18

Schedules referred to above form an integral part of the Profit and Loss Account

This is the Profit and Loss Account referred to in our report of even date

As at As at March 31, March 31, 2012 2011 Schedule (Rs. '000) (Rs. '000)

CAPITAL ANDLIABILITIES

Capital 1 9,853,492 9,853,492 Reserves and Surplus 2 30,612,753 25,358,165 Deposits 3 59,648,638 59,689,055 Borrowings 4 53,143,704 19,402,077 Other Liabilities and Provisions 5 8,520,327 7,619,785

TOTAL 161,778,914 121,922,574

ASSETS

Cash and balances with Reserve Bank of India 6 4,196,962 5,148,245 Balances with banks and money at call and short notice 7 2,424,095 291,662 Investments 8 82,258,155 48,605,942 Advances 9 62,053,674 58,591,405 Fixed Assets 10 422,786 310,970 Other Assets 11 10,423,242 8,974,350

TOTAL 161,778,914 121,922,574

Contingent Liabilities 12 5,463,364,167 5,015,929,235

Bills for Collection 60,705,511 34,283,256

Significant accounting policies and notes to the Financial Statements 18

Schedules referred to above form an integral part of the Balance Sheet .



Year Ended Year EndedPARTICULARS March 31, 2012 March 31, 2011 (Rs. '000) (Rs. '000)

Cash flow from Operating ActivitiesNet profit before taxation 7,879,324 7,506,589 Adjustments for: Depreciation 112,479 91,942 Interest on subordinated debt 1,926 4,110 Loss/(Profit) on sale of fixed assets 551 (658)Provision for standard assets – 39,000 Provision for leave encashment and sick leave 39,605 120,778 (Writeback)/Provision for country risk provision (2,800) 1,000 Provision/(Writeback) for depreciation on investments 39,621 (44,503)Operating profit before working capital changes 8,070,706 7,718,258 Adjustments for: (Increase)/Decrease in investments (33,691,834) 35,267,163 Increase in advances (3,462,269) (22,279,838)(Increase) in other assets (732,846) (2,674,091)(Decrease)/Increase in deposits (40,417) 4,785,793 Increase in other liabilities and provisions 863,747 2,228,819 Increase/(Decrease) in borrowings 34,856,503 (24,287,698)Cash Generated from Operations 5,863,590 758,405 Less: Direct Taxes Paid (net of refunds received) (3,340,783) (3,430,908)Net Cash generated from/(used in) Operating Activities (A) 2,522,807 (2,672,502)Cash flow from investing activities Purchase of fixed assets (233,166) (167,494)Proceeds from sale of fixed assets 8,320 18,909 Net Cash (used in) Investing Activities (B) (224,846) (148,585)Cash flow from Financing Activities Repayment of subordinated debt (1,114,875) – Interest paid on subordinated debt (1,936) (4,583)Net Cash (used in) Financing Activities (C) (1,116,811) (4,583)

Net change in cash and cash equivalents (A+B+C) 1,181,150 (2,825,670)Cash and Cash equivalents at the beginning of the year as per Schedule 6 and 7 5,439,907 8,265,577 Cash and Cash equivalents at the end of the year as per Schedule 6 and 7 6,621,057 5,439,907 1,181,150 (2,825,670)

Notes to the Cash Flow Statement1) The above cash flow statement has been prepared under Indirect method set out in Accounting Standard 3 issued by The Institute of

Chartered Accountants of India and notified by the Companies (Accounting Standards) Rules 2006. 2) Previous year figures have been regrouped and reclassified wherever necessary to conform to current year’s presentation.

This is the Cash Flow Statement referred to in our report of even date.

For B S R & Co. For BANK OF AMERICA, N.A. – INDIA BRANCHES Chartered Accountants Firm Registration No. 101248W Sd/- Sd/- Sd/- N Sampath Ganesh Kaku Nakhate Kumar ShahPartner Chief Executive Officer Chief Financial OfficerMembership No: 042554

Mumbai: June 28, 2012 Mumbai: June 28, 2012 Mumbai: June 28, 2012

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2012



SCHEDULES FORMING PART OF THE BALANCE SHEET

As at As at March 31, March 31, 2012 2011 (Rs. '000) (Rs. '000)

SCHEDULE 3 – Deposits

A. I. Demand Deposits i) From Banks 1,707,894 1,172,082 ii) From Others 27,644,785 28,629,571

II. Savings Bank Deposits 1,988,325 3,778,475

III. Term Deposits i) From Banks – – ii) From Others 28,307,634 26,108,927

TOTAL (I, II and III) 59,648,638 59,689,055

B. i) Deposits of Branches in India 59,648,638 59,689,055 ii) Deposits of Branches outside India – –

TOTAL 59,648,638 59,689,055

SCHEDULE 4 – Borrowings

I. Borrowings in India

i) Reserve Bank of India 8,200,000 4,000,000 ii) Other Banks 8,000,000 5,450,000 iii) Other Institutions and Agencies 27,098,106 2,996,518

43,298,106 12,446,518

II. Borrowings outside India 9,845,598 6,955,559

TOTAL (I and II) 53,143,704 19,402,077

Secured borrowings in I and II above 35,298,106 6,996,518

SCHEDULE 5 – Other Liabilities and Provisions

I. Bills payable 1,217,186 1,236,289 II. Inter-office adjustments – net 68,374 – III. Interest accrued 260,121 111,508 IV. Provisions against standard assets (Refer Note 13 – Schedule 18) 767,415 767,415 V. Others (including provisions) (Refer Note 8 – Schedule 18) 6,207,231 5,504,573

TOTAL 8,520,327 7,619,785


SCHEDULE 1 – CapitalI. Amount of deposit kept with Reserve Bank of India under Section 11(2)(b)(ii) of the Banking Regulation Act, 1949 8,030,000 6,500,000

II. Amount brought in as start-up capital 2,000 2,000 Tier I Capital augmented by Head Office 9,851,492 9,851,492 TOTAL 9,853,492 9,853,492

Note: Capital infused during the year: Rs. Nil (Previous Year Rs. Nil)

SCHEDULE 2 – Reserves and Surplus I. Statutory Reserves Opening balance 7,204,447 6,147,858 Add : Transfer from Profit and Loss Account 1,313,647 1,056,589 8,518,094 7,204,447 II. Capital Reserves 3,221,517 3,221,517 3,221,517 3,221,517 III. Amount Retained in India for meeting Capital to Risk- Weighted Asset Ratio (CRAR) Opening balance 9,077,363 9,077,363 Add : Transfer from Revenue and Other Reserves 5,798,138 – 14,875,501 9,077,363

IV. Revaluation Reserves 56,700 56,700 56,700 56,700 V. Revenue and Other Reserves Opening balance 5,798,138 2,628,373 Add : Transfer from Profit and Loss Account – 3,169,765 5,798,138 5,798,138 Less : Transfer to amount retained in India for meeting Capital to Risk-Weighted Asset Ratio (CRAR) 5,798,138 – – 5,798,138VI. Balance in Profit and Loss Account 3,940,941 –

TOTAL (I, II, III, IV, V and VI) 30,612,753 25,358,165





SCHEDULE 6 – Cash and Balances with Reserve Bank of India

I. Cash in hand (including foreign currency notes) 59,236 67,060

II. Balances with Reserve Bank of India

(i) In Current account 4,137,726 5,081,185

(ii) In Other accounts – –

TOTAL (I and II) 4,196,962 5,148,245

SCHEDULE 7 – Balances with Banks and Money at Call and Short Notice

I. In India

i) Balances with banks

a) In Current accounts 184,400 30,283

b) In Other deposit accounts – –

ii) Money at call and short notice

a) with banks – –

b) with other institutions 1,592,228 – TOTAL (i and ii) 1,776,628 30,283

II. Outside India

i) In Current accounts 647,467 261,379

ii) In Other deposit accounts – –

iii) Money at call and short notice – –

647,467 261,379

TOTAL (I and II) 2,424,095 291,662


SCHEDULE 8 – Investments

I. Investments in India (i) Government Securities* 57,159,707 27,040,556 (ii) Other approved securities – – (iii) Shares 600 600 (iv) Debentures and bonds 101,756 – (v) Subsidiaries and/or joint ventures – – (vi) Others (including certificate of deposits and pass through certificates) 25,065,916 21,594,989

Gross Investments 82,327,979 48,636,145 Less : Provision for depreciation 69,824 30,203

82,258,155 48,605,942

II. Investments outside India – –

TOTAL (I and II) 82,258,155 48,605,942 * Includes securities of Face Value Rs. 25,350,000,000/- pledged

with Clearing Corporation of India Limited as margin deposit (Previous Year: Rs. 5,200,000,000/-)

* Includes securities of Face Value Rs. 8,030,000,000/- deposited with Reserve Bank of India under section 11(2)(b)(ii) of Banking Regulation Act, 1949 (Previous Year: Face Value: Rs. 6,500,000,000/-)

* Includes securities of Face Value Rs. 8,610,000,000/- pledged with Reserve Bank of India for funds borrowed under Liquidity Adjustment Facility (Previous year: Rs. 4,340,000,000)

SCHEDULE 9 – Advances A. (i) Bills purchased and discounted* 4,317,192 8,772,510 (ii) Cash credits, overdrafts and loans repayable on demand 57,735,791 49,817,689 (iii) Term loans 691 1,206

TOTAL 62,053,674 58,591,405

B. (i) Secured by tangible assets (including book debts) 5,834,682 9,071,977 (ii) Covered by Bank/ Government guarantees – – (iii) Unsecured 56,218,991 49,519,428

TOTAL 62,053,674 58,591,405





SCHEDULE 9 – (Contd)C. I. Advances in India (i) Priority Sector 14,843,422 14,034,094 (ii) Public sector – – (iii) Banks 410,044 1,005,997 (iv) Others 46,800,208 43,551,314

62,053,674 58,591,405

II. Advances outside India – –

TOTAL (I and II) 62,053,674 58,591,405

* net of Bills re-discounted amounting to Rs. 3,695,563 ('000s) [Previous year Nil] SCHEDULE 10 – Fixed Assets I. Premises At Cost on March 31 of preceding year 80,743 80,743 Additions during the year – –

80,743 80,743

Deductions during the year – –

80,743 80,743

Accumulated depreciation 72,946 71,701

7,797 9,042

Capital Works in Progress Nil Nil

7,797 9,042

II. Other Fixed Assets (including Furniture and Fixtures)* At Cost on March 31 of preceding year 742,663 635,901 Additions during the year 214,379 153,591

957,042 789,492

Deductions during the year 37,777 46,829

919,265 742,663

Accumulated depreciation/ amortization 539,476 457,163

379,789 285,500 Capital Works in Progress 35,200 16,428

414,989 301,928

TOTAL (I and II) 422,786 310,970 * (Refer Note 35 – Schedule 18)


SCHEDULE 11 – Other Assets

I. Interest Accrued 162,128 268,314

II. Advance tax and tax deducted at source 1,669,896 1,038,407 (net of Provision for taxation – Refer Note 21 – Schedule 18)

III. Stationery and Stamps – –

IV. Inter-office adjustments – net – 5,027

V. Deferred tax assets (Refer Note 20- Schedule 18) 212,062 127,626

VI. Others (Refer Note 8 – Schedule 18) 8,379,156 7,534,976

TOTAL 10,423,242 8,974,350

SCHEDULE 12 – Contingent Liabilities

I. Claims against the Bank not acknowledged as Debts 458,116 636,881 (including tax related matters)

II. Liability for partly paid investments – –

III. Liability on account of outstanding forward exchange contracts 2,123,994,203 1,142,576,943

IV. Liability on account of outstanding derivative contracts 3,304,274,652 3,843,170,511

V. Guarantees given on behalf of constituents (a) in India 10,286,182 10,719,377 (b) outside India 3,153,301 2,453,699

VI. Acceptances, endorsements and other obligations 9,533,517 8,689,057

VII. Other items for which the Bank is contingently liable – Committed Lines of credit 7,968,633 7,682,767 – Bills re-discounted 3,695,563 –

TOTAL 5,463,364,167 5,015,929,235



Year Ended Year Ended March 31, March 31, 2012 2011 (Rs. '000) (Rs. '000)

SCHEDULE 13 – Interest Earned

I. Interest/discount on advances/bills 6,735,738 3,357,997

II. Income on investments 4,324,613 3,586,816

III. Interest on balances with Reserve Bank of India and other inter-bank funds 20,758 56,193

IV. Others 50,103 251,867

TOTAL 11,131,212 7,252,873

SCHEDULE 14 – Other Income

I. Commission, exchange and brokerage 466,790 465,593

II. Profit/(Loss) on sale of investments (net) 291,688 (544,358)

III. Profit/(Loss) on revaluation of investments – – IV. (Loss)/Profit on sale of land, buildings and other assets (net) (551) 658

V. Profit on exchange/derivative transactions (net) 3,623,915 5,300,952

VI. Miscellaneous Income (Refer Note 24 – Schedule 18) 696,935 587,013 TOTAL 5,078,777 5,809,858

SCHEDULE 15 – Interest Expended

I. Interest on deposits 3,000,425 1,512,810

II. Interest on Reserve Bank of India/inter-bank borrowings 406,198 223,942

III. Others 832,223 238,580

TOTAL 4,238,846 1,975,332

SCHEDULES FORMING PART OF THE PROFIT AND LOSS ACCOUNT

Year Ended Year Ended March 31, March 31, 2012 2011 (Rs. '000) (Rs. '000)

SCHEDULE 16 – Operating Expenses

I. Payments to and provisions for employees 2,118,680 2,172,915

II. Rent, taxes and lighting 186,219 173,699

III. Printing and stationery 44,975 33,450

IV. Advertisement and publicity – –

V. Depreciation on Bank's property 112,479 91,942

VI. Directors' fees, allowances and expenses – –

VII. Auditors' fees and expenses 2,773 3,094

VIII. Law Charges 3,366 3,622

IX. Postages, Telegrams, Telephones, etc 206,169 70,238

X. Repairs and maintenance 58,005 58,445

XI. Insurance 67,182 55,007

XII. Other expenditure (Refer Note 23 – Schedule 18) 1,255,150 922,901 TOTAL 4,054,998 3,585,313 SCHEDULE 17 – Provisions and Contingencies

I. Provision for standard assets – 39,000

II. (Write back)/Provision for country risk provision (2,800) 1,000

III. Provision for Taxation (Refer Note 21 – Schedule 18) 2,713,646 3,369,724

IV. Deferred tax (Refer Note 20 – Schedule 18) (84,436) (90,339)

V. (Write back)/Provision for wealth tax (4,474) 850

VI. Provision/(Write back) for depreciation on investments 39,621 (44,503)

TOTAL 2,661,557 3,275,732



SCHEDULES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2012

SCHEDULE 18 – SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE FINANCIAL STATEMENTS

A) Background The financial statements for the year ended March 31, 2012 comprise the accounts of the India branches of Bank of America,

N.A. (‘the Bank’) which is incorporated in the United States of America with limited liability.

B) Basis of preparation The financial statements are prepared and presented under the historical cost convention on accrual basis of accounting, unless

otherwise stated and are in accordance with the Generally Accepted Accounting Principles, statutory provisions prescribed under the Banking regulation Act, 1949, circulars and guidelines issued by The Reserve Bank of India (‘RBI’) from time to time and Accounting Standards (‘AS’) issued by The Institute of Chartered Accountants of India (‘ICAI’) and notified by the Companies (Accounting Standards) Rules, 2006, to the extent applicable and conform to the statutory requirements prescribed by the RBI from time to time and current practices prevailing within the banking industry in India.

The financial statements are presented in Indian Rupees rounded off to the nearest thousand unless otherwise stated.

C) Use of Estimates The preparation of financial statements, in conformity with the Generally Accepted Accounting Principles, requires management

to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses and disclosure of contingent liabilities as at the date of the financial statements. Actual results could differ from those estimates and difference between the actual results and estimates are recognized in the period in which the results are known. Any revision to the accounting estimates is recognized in the current and future periods as appropriate.

D) Significant Accounting Policies 1) Revenue recognition Interest income is recognized in the Profit and Loss account on an accrual basis, except in case of interest on non-

performing advances which is recognized as income upon receipt in accordance with the RBI prudential norms.

Interest income on discounted instruments is recognized over the tenor of the instrument on a constant effective yield basis.

Commission on guarantees and letters of credit is recognized upfront.

2) Foreign Exchange Transactions Transactions in foreign currency are recorded and translated at exchange rates prevailing on the date of the transaction.

Exchange differences arising on foreign exchange transactions settled during the year are recognized in the Profit and Loss Account.

Monetary assets and liabilities denominated in foreign currencies are translated at the Balance Sheet date at exchange rates notified by Foreign Exchange Dealers’ Association of India (FEDAI) and the resultant exchange differences are recognized in the Profit and Loss account.

Outstanding forward exchange contracts are revalued at rates of exchange notified by FEDAI and the resulting profits or losses are included in the Profit and Loss Account.

Contingent liabilities on account of foreign exchange contracts, guarantees and acceptances, endorsements and other obligations denominated in foreign currencies are disclosed at the year-end closing rates of exchange notified by FEDAI.

3) Derivatives The Bank enters into derivative contracts such as interest rate swaps, cross currency swaps, options, exchange traded

interest rate futures, exchange traded currency futures and forward exchange contracts for trading purposes.

All derivative transactions are classified as trading derivatives. Outstanding derivative contracts, other than interest rate futures and currency future, are valued at the estimated realizable market price (fair value). Resulting gains/losses are recognized in the Profit and Loss Account under ‘Other Income’ with the corresponding net unrealized amounts reflected under ‘Other Assets’ or ‘Other Liabilities’ on the Balance Sheet.

Fair value is determined by reference to a quoted market price or by using a valuation model. In case the market prices do not appropriately represent the fair value that would be realized for a position or portfolio, valuation adjustments such as market risk close-out costs and bid-offer adjustments are made to arrive at the appropriate fair value. These adjustments are calculated on a portfolio basis, and are reported together with/or as a part of the carrying value of the positions being valued, thus reducing trading assets or increasing trading liabilities.



Valuation models, where used, calculate the expected cash flows under terms of the specific contracts, taking into account the relevant market factors viz. interest rates, foreign exchange rates, volatility, prices etc..

Interest rate futures and currency futures are marked-to-market using the closing price of relevant futures contract as published by the exchanges or clearing corporation. Margin money deposited with the exchanges is presented under ‘Other Assets’.

The Bank also maintains provisions on the current mark-to-market value of the contract, arising on account of foreign exchange and derivative transactions in accordance with the RBI Master circular DBOD.No.BP.BC.12 /21.04.048/2011-12 dated July 1, 2011 on income recognition, asset classification and provisioning pertaining to advances.

Any overdue receivables representing positive mark-to-market value of foreign exchange and derivative transactions are treated as non-performing assets, if remaining unpaid for a period of 90 days or more pursuant to the above guidelines.

4) Investments

Investments are accounted for in accordance with the RBI Master Circular DBOD No. BP. BC. 19/ 21.04.141/2011-12 dated July 1, 2011 on Prudential norms for classification, valuation and operation of investment portfolio by banks.

Classification

Investments are classified as “Held to Maturity” (HTM), “Held for Trading” (HFT) and “Available for Sale” (AFS) at the time of purchase in accordance with RBI norms. Under each of these classifications, investments are further categorized as i) Government Securities ii) Other approved securities iii) Shares iv) Debentures and Bonds v) Subsidiaries and/or joint ventures and vi) Others.

Valuation

Investments held under HTM classification are carried at acquisition cost. If the acquisition cost is more than the face value, the premium is amortized over the remaining tenor of the investments.

Investments classified under HFT and AFS portfolio are marked to market on a monthly basis. Investments classified under HFT and AFS portfolio are valued as per rates declared by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivatives Association of India (FIMMDA) and in accordance with the RBI guidelines. Consequently net depreciation, if any, under each of the classifications in respect of any category mentioned in ‘Schedule 8-Investments’ is provided for in the Profit and Loss Account. The net appreciation, if any, under any classification is ignored, except to the extent of any depreciation provided previously. The book value of the individual securities is not changed consequent to periodic valuation of investments.

Treasury Bills, Commercial Paper and Certificates of Deposit, being discounted instruments, are valued at the carrying cost.

Investments in Pass Through Certificates (PTCs) are valued by adopting base yield curve and corporate bond spread relative to weighted average maturity of the security.

Investment Reserve Account

In accordance with the aforesaid Master Circular, in case provision on account of depreciation in the HFT and AFS categories is found to be in excess of the required amount, the excess is credited to the Profit and Loss Account and an equivalent amount (net of taxes, if any and transfer of Statutory Reserve as applicable to such excess provision) is appropriated to an Investment Reserve Account.

The provision required to be created on account of depreciation in investments in AFS & HFT categories is debited to the Profit and Loss Account and an equivalent amount (net of tax benefit, if any and net of consequent reduction in transfer to Statutory Reserves) is transferred from the Investment Reserve Account to the Profit and Loss Account, to the extent available.

Transfer between classifications

Transfer of investment between categories is accounted for in accordance with the extant RBI guidelines, as under:

a) Transfer from AFS/HFT to HTM is made at the lower of book value or market value at the time of transfer.

b) Transfer from HTM to AFS/HFT is made at acquisition price/book value if originally placed in HTM at a discount and at amortised cost if originally placed in HTM at a premium.

c) Transfer from AFS to HFT category or vice-versa is made at book value and the provision for the accumulated depreciation, if any, held is transferred to the provisions for depreciation against the HFT securities and vice-versa.




Repurchase transactions

Repurchase and Reverse Repurchase transactions including those under the Liquidity Adjustment Facility (LAF) with RBI are accounted for in accordance with RBI guidelines as secured borrowing and lending transactions.

Brokerage and Commission

Brokerage and Commission paid at the time of acquisition of a security is charged to Profit and Loss Account.

Broken period interest

Broken period interest paid at the time of acquisition of the security is charged to the Profit and Loss Account.

5) Fixed Assets

Fixed Assets are stated at cost less accumulated depreciation/amortization.

Tangible Assets

Except for items forming part of (i) and (ii) below, depreciation is provided, prorata for the period of use, by straight line method (SLM), based on management estimate of useful lives of the fixed assets, or the SLM rates prescribed in Schedule XIV to the Companies Act, 1956 whichever is higher at the following rates:

Asset category Depreciation rate per annum Buildings 5% Servers, networking and other computer equipment 20% – 50% Furniture and fixtures 10% Vehicles 20% Other equipment (mechanical/electronic) 15% – 33.33%

i) Assets costing less than USD 2,500 are fully depreciated in the year of purchase

ii) Leasehold improvements are depreciated over the lease period including the renewal periods (if any). Assets associated with premises taken on lease are depreciated on straight line basis using the rates derived from the lease or at the rates mentioned above, whichever is higher.

Intangible Assets

The Company capitalizes software, where it is reasonably estimated that the software has an enduring useful life. Software is amortized over an estimated useful life of 2 to 5 years.

Software individually costing less than the rupee equivalent of USD 10,000/- is fully amortized in the year of purchase.

Impairment of Assets

In accordance with AS-28 on ‘Impairment of Assets’, an asset is considered as impaired when at balance sheet date there are indications of impairment and the carrying amount of the asset, or where applicable, the cash generating unit to which the asset belongs, exceeds its recoverable amount (i.e. the higher of the asset’s net selling price and value in use). The Bank assesses at each balance sheet date whether there is any indication that an asset may be impaired based on internal/external factors. If any such indication exists, the Bank estimates the recoverable amount of the asset. If such recoverable amount of the asset is less than the carrying amount, the carrying amount is reduced to the recoverable amount and the reduction is recognized as an impairment loss in the Profit and Loss account.

6) Advances

Classification and provisioning for advances are carried out in accordance with RBI Master Circular DBOD.No.BP.BC.12 /21.04.048/ 2011-12 dated July 1, 2011 on prudential norms for income recognition, asset classification and provisioning pertaining to advances.

Advances are stated net of bills re-discounted, specific loan loss provisions and interest in suspense for non-performing advances in accordance with the norms prescribed by the RBI.

The Bank also maintains general provisions on standard assets over and above the specific provisions to cover potential credit losses inherent in any loan portfolio.

Provision for Standard assets and Country Risk Exposure is made in accordance with the norms issued by the RBI and disclosed under Schedule 5 – ‘Other liabilities and Provisions’.




7) Employee Benefits Provident fund Provident fund is contributed to a trust set up by the Bank for all eligible employees. The interest rate payable to the

members of the trust should not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. Shortfall, if any, is contributed by the Bank and to that extent this is a defined benefit plan. Contribution to the trust is charged to the Profit and Loss account.

Gratuity The Bank has a gratuity scheme, a defined benefit plan, for all eligible employees administered by a trust set up by the

Bank. The costs of providing benefits under the gratuity scheme are determined using the Projected Unit Credit Method on the basis of actuarial valuation carried out by an independent actuary at each balance sheet date. The Bank makes periodical contributions to the trust. Gratuity benefit obligations recognised in the Balance Sheet represent the present value of the obligations as reduced by the fair value of plan assets. Actuarial gains and losses are recognised in the Profit and Loss Account in the year in which they arise.

Compensated Absences Liability for sick leave and privilege leave defined benefit plans for all eligible employees is recognized based on actuarial

valuation carried out by an independent actuary as at the Balance Sheet date.

Pension The Bank has a pension scheme, a defined contribution plan, for all eligible employees and is administered by a trust set

up by the bank. Bank’s contribution towards the pension scheme is accounted for on an accrual basis and charged to the Profit and Loss Account.

8) Taxation Taxes on income are accounted for in accordance with Accounting Standard 22 on “Accounting for Taxes on Income”

and comprise current and deferred tax.

Current tax is measured at the amount expected to be paid in respect of taxable income for the year in accordance with the Income tax-Act, 1961.

The tax effect of timing differences that result between taxable income and accounting income and are capable of reversal in one or more subsequent periods are recorded as a deferred tax asset or deferred tax liability. These are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets arising on account of carry forward losses and unabsorbed depreciation under tax laws are recognized only if there is virtual certainty of its realization, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. The carrying amount of deferred tax assets at each balance sheet date is reduced to the extent that it is no longer reasonably certain that sufficient future taxable income will be available against which the deferred tax asset can be realized.

9) Accounting for leases Leases where the lessor effectively retains substantially all the risks and benefits of ownership over the lease term are

classified as operating leases. For operating leases, lease payments are recognized as an expense in the statement of Profit and Loss account on a straight line basis over the lease term.

10) Provisions and contingent liabilities A provision is recognized when there is a present obligation as a result of a past event that probably requires an outflow

of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

Provisions are reviewed at each Balance Sheet date and adjusted to reflect the best available estimate. If it is no longer probable that an outflow of resources would be required to settle the obligation, the provision is reversed.

Contingent assets are not recognized in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an economic benefit will arise, the asset and the related income are recognized in the period in which the change occurs.




Additional Disclosures in terms of RBI Master Circular on Disclosure in Financial Statements – Notes to Accounts no. DBOD.BP.BC No.16/21.04.018/2011-12 dated July 01, 20111. Ratio of capital funds to risk weighted assets as at March 31, 2012 is stated below:

Sr. No. Particulars As at As at March 31, 2012 March 31, 2011

i) CRAR – BASEL II 17.59% 14.51% ii) CRAR – Tier I Capital (Basel II) 17.21% 14.12% iii) CRAR – Tier II Capital (Basel II) 0.38% 0.39% iv) CRAR - BASEL I 19.12% 16.03% v) CRAR – Tier I Capital (Basel I) 18.71% 15.60% vi) CRAR – Tier II Capital (Basel I) 0.41% 0.43% vii) Percentage of the shareholding of the Government of India in nationalized banks as at March 31, 2012 Nil Nil viii) Amount of subordinated debt raised during the year as Tier II capital Nil Nil ix) Amount raised by issue of Innovative Perpetual Debt Instruments during the year Nil Nil x) Amount raised by issue of Upper Tier II instruments during the year Nil Nil

CRAR – Capital to Risk Weighted Assets Ratio

2. Investments (Rs. ‘000)

Particulars As at As at March 31, 2012 March 31, 2011

1) Value of Investments i) Gross Value of Investments (a) In India 82,327,979 48,636,145 (b) Outside India Nil Nil ii) Provisions for Depreciation (a) In India 69,824 30,203 (b) Outside India Nil Nil iii) Net Value of Investments (a) In India 82,258,155 48,605,942 (b) Outside India Nil Nil 2) Movement of provisions held towards depreciation on investments i) Opening balance 30,203 74,706 ii) Add: Provisions made during the year 39,621 Nil iii) Less: Write-back of excess provision during the year Nil 44,503 iv) Closing balance 69,824 30,203

3. Information on Repurchase Agreement and Reverse Repurchase Agreement (Rs. ‘000)

For the Year ended Minimum Maximum Daily Average Outstanding March 31, 2012* Outstanding Outstanding Balance as at

during the year during the year Outstanding March 31, 2012 Securities Sold under Repurchase Agreement ● Government Securities Nil 29,129,072 5,886,614 16,950,118 ● Corporate debt securities Nil Nil Nil Nil Securities Purchased under Reverse Repurchase Agreement ● Government Securities Nil 8,352,578 659,805 1,592,228 ● Corporate debt securities Nil Nil Nil Nil





(Rs. ‘000)

For the Year ended Minimum Maximum Daily Average Outstanding March 31, 2011* Outstanding Outstanding Balance as at

during the year during the year Outstanding March 31, 2011

Securities Sold under Repurchase Agreement ● Government Securities 51,205 20,199,000 3,100,446 4,000,000 ● Corporate debt securities Nil Nil Nil Nil Securities Purchased under Reverse Repurchase Agreement ● Government Securities 51,900 37,829,374 2,439,554 Nil ● Corporate debt securities Nil Nil Nil Nil

* Includes repurchase and reverse repurchase agreements under the Liquidity Adjustment Facility (LAF) with Reserve Bank of India.

4. Issuer Composition of Non-SLR Investments As at March 31, 2012 (Rs. ‘000) Sr. No. Issuer Amount Extent of Extent of ‘below Extent of Extent of (Book Value) private investment ‘unrated’ ‘unlisted’ placement grade’ securities securities securities (1) (2) (3) (4)# (5)# (6)# (7)# 1) Public Sector Undertakings* 101,756 Nil Nil Nil Nil 2) Financial Institutions 2,569,803 2,569,803 Nil Nil 2,569,803 3) Banks 22,496,113 22,496,113 Nil Nil 22,496,113 4) Private corporate Nil Nil Nil Nil Nil 5) Subsidiaries/Joint ventures Nil Nil Nil Nil Nil 6) Others 600 600 Nil 600 600 7) Provision held towards depreciation (33,433) N.A N.A N.A N.A Total 25,134,839 25,066,516 Nil 600 25,066,516

* Comprises 9.61% Power Finance Corporation Limited 2021. # Amounts reported under columns (4), (5), (6) and (7) above are not mutually exclusive.

As at March 31, 2011

(Rs. ‘000) Sr. No. Issuer Amount Extent of Extent of ‘below Extent of Extent of (Book Value) private investment ‘unrated’ ‘unlisted’ placement grade’ securities securities securities (1) (2) (3) (4)# (5)# (6)# (7)#

1) Public Sector Undertakings Nil Nil Nil Nil Nil 2) Financial Institutions Nil Nil Nil Nil Nil 3) Banks 21,594,989 21,594,989 Nil Nil 21,594,989 4) Private corporates Nil Nil Nil Nil Nil 5) Subsidiaries/Joint ventures Nil Nil Nil Nil Nil 6) Others 600 600 Nil 600 600 7) Provision held towards depreciation Nil N.A N.A N.A N.A

Total 21,595,589 21,595,589 Nil 600 21,595,589

# Amounts reported under columns (4), (5), (6) and (7) above are not mutually exclusive.



5. Non-Performing Non-SLR Investments as at March 31, 2012 There are no non-performing non-SLR Investments as at March 31, 2012. (Previous year Rs. Nil)6. Forward Rate Agreements/Interest Rate Swaps

(Rs. ‘000) Sr. No. Particulars As at As at March 31, 2012 March 31, 2011

i) The notional principal value of interest rate swaps 3,042,129,359 3,566,237,777 ii) Losses which would be incurred if counterparties failed to fulfill their obligations under the agreements 18,224,683 31,227,415 iii) Collateral obtained by the bank upon entering into swaps Nil Nil iv) Concentration of credit risk arising from the swaps (in the banking industry) 97% 99% v) The fair value of interest rate swaps – Gains/(Losses) 2,088,872 1,993,525

Notes: a) Swaps undertaken with counterparties are based on established market benchmarks. b) The counterparties for the swaps undertaken are Banks/Corporates and are within approved credit exposure limits. c) There are no forward rate agreements as on March 31, 2012. (Previous year Rs. Nil) d) For accounting policies relating to the Interest Rate Swaps refer Note (D)(3) – Schedule 18.

7. Exchange Traded Interest Rate Derivatives (Rs. ‘000) Sr. No. Particulars As at As at March 31, 2012 March 31, 2011

1) Notional principal amount of exchange traded interest rate derivatives undertaken during the year, – Interest rate futures 2,152,800 Nil 2) Notional principal amount of exchange traded interest rate derivatives outstanding as on March 31, – Interest rate futures Nil Nil 3) Notional principal amount of exchange traded derivatives outstanding and not "highly effective" – Interest rate futures Nil Nil 4) Mark-to-market value of exchange traded derivatives outstanding and not "highly effective" – Interest rate futures Nil Nil

8. Disclosure on Risk Exposure on Derivatives a. Qualitative Disclosure ● The Bank enters into derivative contracts for the purposes of trading and to meet customer requirements to manage their risks. ● The Bank has comprehensive policies in place for measurement, reporting, monitoring and mitigating credit, market and

operational risk. o Credit risk is managed based on the risk profile of the borrower or counterparty, repayment sources and other support

given the current events, conditions and expectations. Credit risk for a derivative contract is sum of the potential future changes in value and the replacement cost, which is the positive mark-to-market value of the contract.

o The Bank uses Value-at-Risk (VaR) modeling and stress testing to measure and manage market risk. Trading limits and VaR are used to manage day-to-day risks and are subject to testing where expected performance is compared to actual performance. All limit excesses are communicated to senior management for review.

o There exists an organizational set up for the management of risk. All lines of business are responsible for the risks within the business including operational risks. Such risks are managed through corporate-wide and/or line of business specific policies and procedures, controls, and monitoring tools.

● Treasury front-office, mid-office and back-office are managed by officials with necessary systems support and clearly defined responsibilities.




● There exist policies for recording derivative transactions, recognition of income, valuation of outstanding contracts, provisioning and credit risk mitigation. The gains or losses are aggregated product-wise and reported under the head ‘Profit on exchange/derivative transactions’ in the Profit and Loss account and either “Other assets” or “Other Liabilities” depending upon whether the present value of the aggregate outstanding derivative instruments is a receivable or payable.

● The details in respect of the mark-to-market positions for forward exchange contracts, interest rate swaps, cross currency interest rate swaps, currency futures & options which are aggregated product-wise and disclosed net on the Balance Sheet under ‘Other Assets’ or ‘Other Liabilities’ in Schedule 11 or Schedule 5 respectively are as under:

As at March 31, 2012 (Rs. ‘000)

Particulars Asset (+) Liability (-) Net

Forward exchange contracts 45,721,134 (41,711,908) 4,009,226 Interest rate swap 18,224,683 (16,135,811) 2,088,872 Cross currency interest rate swap 18,110,497 (20,965,754) (2,855,257) Currency Futures Nil (36,311) (36,311) Options 2,059,730 (347,104) 1,712,626

Total 84,116,044 (79,196,888) 4,919,156

As at March 31, 2011 (Rs. ‘000)

Particulars Asset (+) Liability (-) Net

Forward exchange contracts 16,391,874 (15,589,973) 801,901 Interest rate swap 31,227,415 (29,233,890) 1,993,525 Cross currency interest rate swap 19,460,788 (18,552,429) 908,359 Currency Futures Nil (15,623) (15,623) Options 2,051,866 (611,506) 1,440,360

Total 69,131,943 (64,003,421) 5,128,522

b. Quantitative Disclosure (Rs. ‘000) Sr. No. Particulars Currency Interest Rate Derivatives** Derivatives*

As at As at March 31, 2012 March 31, 2012 1) Derivatives (Notional Principal Amount) a) For hedging Nil Nil b) For trading 262,145,293 3,042,129,359 2) Marked to Market Positions a) Asset (+) 20,170,227 18,224,683 b) Liability (-) (21,349,170) (16,135,811) 3) Credit Exposure# 41,126,187 41,149,904 4) Likely impact of one percentage change in interest rate (100*PV01) a) on hedging derivatives Nil Nil b) on trading derivatives 47,730 1,667,637 5) Maximum and Minimum of 100*PV01 observed during the year a) on hedging Nil Nil b) on trading (Maximum) 367,228 1,779,821 c) on trading (Minimum) (150,670) (514,112)

* Interest Rate derivatives comprise Interest Rate swaps and interest rate futures. ** Currency Derivatives includes Currency futures, Cross Currency interest rate swaps and options. # Credit exposure represents sum of potential future exposure and positive mark-to-market value of contracts.





(Rs. ‘000)

Sr. No. Particulars Currency Interest Rate Derivatives** Derivatives*

as at as at March 31, 2011 March 31, 2011

1) Derivatives (Notional Principal Amount) a) For hedging Nil Nil b) For trading 276,932,734 3,566,237,777 2) Marked to Market Positions a) Asset (+) 21,512,654 31,227,415 b) Liability (-) (19,179,558) (29,233,890) 3) Credit Exposure# 43,920,663 60,994,490 4) Likely impact of one percentage change in interest rate (100*PV01) a) on hedging derivatives Nil Nil b) on trading derivatives 553,711 715,613 5) Maximum and Minimum of 100*PV01 observed during the year a) on hedging Nil Nil b) on trading (Maximum) 729,438 2,074,661 c) on trading (Minimum) 151,557 (173,093)

* Interest Rate derivatives comprise Interest Rate swaps and interest rate futures. ** Currency Derivatives includes Currency futures, Cross Currency interest rate swaps and options. # Credit exposure represents sum of potential future exposure and positive mark- to-market value of contracts.

c. Nature and terms of interest rate swaps: (Rs. ‘000)

Nature Benchmark No. of trades as at Notionals as at No. of trades as at Notionals as at March 31, 2012 March 31, 2012 March 31, 2011 March 31, 2011

Trading MIBOR* 2,887 2,510,485,008 4,959 3,164,638,455 Trading MIFOR** 681 333,866,514 549 252,525,572 Trading INBMK*** 54 26,000,000 60 29,000,000 Trading Others 145 171,777,836 153 120,073,750

Total 3,767 3,042,129,358 5,721 3,566,237,777

* Mumbai Interbank Offer Rate ** Mumbai Interbank Forward Rate *** India Benchmark

9. Movement in Non Performing Assets (Funded): (Rs. ‘000) Particulars As at As at March 31, 2012 March 31, 2011

Gross NPAs as on April 01 (Opening Balance) 6,978 6,978 Additions (Fresh NPAs during the year) Nil Nil Sub-total (A) 6,978 6,978 Less: - (i) Upgradations Nil Nil (ii) Recoveries (excluding recoveries made from upgraded accounts) Nil Nil (iii) Write-offs Nil Nil Sub-total (B) Nil Nil Gross NPAs as on March 31 (Closing balance) (A-B) 6,978 6,978




(Rs. ‘000) Sr. No. Item As at As at March 31, 2012 March 31, 2011

1) Net NPAs to Net Advances (%) Nil Nil 2) Movement of NPAs (Gross) (a) Opening balance 6,978 6,978 (b) Additions during the year Nil Nil (c) Recoveries/write-offs Nil Nil (d) Closing balance 6,978 6,978 3) Movement of Net NPAs (a) Opening balance Nil Nil (b) Additions during the year Nil Nil (c) Recoveries/write-offs Nil Nil (d) Closing balance Nil Nil 4) Movement of provisions for NPAs (excluding provisions on standard assets) (a) Opening balance 6,978 6,978 (b) Provisions made during the year Nil Nil (c) Recoveries/write-offs Nil Nil (d) Closing balance 6,978 6,978

10. Accounts subject to Restructuring In accordance with the RBI Master Circular on Disclosure in Financial Statements – Notes to Accounts no. DBOD.BP.BC

No.16/21.04.018/2011-12 dated July 01, 2011 on disclosure in the financial statements, the total accounts subject to restructuring, rescheduling, renegotiation during the year are as follows:

(Rs. ‘000) Particulars CDR Mechanism SME Debt Others for the for the year ended Restructuring for year ended March 31, 2012 the year ended March 31, 2012 March 31, 2012 Standard Advances No. of Borrowers Nil Nil Nil restructured Amount Outstanding Nil Nil Nil – Out of which restructured Nil Nil Nil Sacrifice (diminution in the fair value) Nil Nil Nil Sub-standard No. of Borrowers Nil Nil Nil advances Amount Outstanding Nil Nil Nil restructured – Out of which restructured Nil Nil Nil Sacrifice (diminution in the fair value) Nil Nil Nil Doubtful advances No. of Borrowers Nil Nil Nil restructured Amount Outstanding Nil Nil Nil – Out of which restructured Nil Nil Nil Sacrifice (diminution in the fair value) Nil Nil Nil

Total No. of Borrowers Nil Nil Nil Amount Outstanding Nil Nil Nil – Out of which restructured Nil Nil Nil Sacrifice (diminution in the fair value) Nil Nil Nil




(Rs. ‘000) Particulars CDR Mechanism SME Debt Others for the for the year ended Restructuring for year ended March 31, 2011 the year ended March 31, 2011 March 31, 2011

Standard Advances No. of Borrowers Nil Nil Nil restructured Amount Outstanding Nil Nil Nil – Out of which restructured Nil Nil Nil Sacrifice (diminution in the fair value) Nil Nil Nil

Sub-standard No. of Borrowers Nil Nil Nil advances Amount Outstanding Nil Nil Nil restructured – Out of which restructured Nil Nil Nil Sacrifice (diminution in the fair value) Nil Nil Nil

Doubtful advances No. of Borrowers Nil Nil Nil restructured Amount Outstanding Nil Nil Nil – Out of which restructured Nil Nil Nil Sacrifice (diminution in the fair value) Nil Nil Nil

Total No. of Borrowers Nil Nil Nil Amount Outstanding Nil Nil Nil – Out of which restructured Nil Nil Nil Sacrifice (diminution in the fair value) Nil Nil Nil

11. No Financial assets were sold during the year to Securitization/Reconstruction Company for asset reconstruction (Previous year Rs. Nil).

12. Details of non-performing financial assets purchased/sold a) Non-performing financial assets purchased (Rs. ‘000) Sr. No. Particulars For the year ended For the year ended March 31, 2012 March 31, 2011

1 (a) No. of accounts purchased during the year Nil Nil (b) Aggregate outstanding Nil Nil 2 (a) Out of these, number of accounts restructured during the year Nil Nil (b) Aggregate outstanding Nil Nil

Total Nil Nil

b) Non-performing financial assets sold (Rs. ‘000) Sr. No. Particulars For the year ended For the year ended March 31, 2012 March 31, 2011

1) No. of accounts sold during the year Nil Nil 2) Aggregate outstanding as at March 31 Nil Nil 3) Aggregate consideration received Nil Nil




13. Provision for standard assets are as follows: (Rs. ‘000) Sr. No. Particulars As at As at March 31, 2012 March 31, 2011 1) Loans and advances 287,408 287,408 2) Foreign exchange contracts and derivatives 480,007 480,007

Total 767,415 767,415

14. Important Financial Ratios:

Sr. No. Particulars For the year ended For the year ended March 31, 2012 March 31, 2011 a) Interest income as a percentage to working funds* 7.67% 6.48% b) Non interest income as a percentage to working funds* 3.50% 5.19% c) Operating Profit as a percentage to working funds* 5.46% 6.70% d) Return on assets* 3.62% 3.77% e) Business (Deposits plus Advances) per employee (Rs. ‘000) 339,928 385,225 f) Profit per employee (Rs. ‘000) 14,886 13,902

* Working funds and assets are the Average of Total assets as reported in Return Form X to RBI under Section 27 of the Banking Regulation Act, 1949.

15. Maturity Pattern of Assets and Liabilities The maturity pattern of assets and liabilities as at March 31, 2012 is as under: (Rs. Crores) Particulars Day 1 2 to 7 8 to 14 15 to 28 29 days Over 3 Over 6 Over 1 Over 3 Over 5 Total

days days days and months months year and years years upto 3 and upto and upto upto and upto months 6 months 1 year 3 years 5 years Advances 104 593 411 581 2,041 459 1,853 163 Nil Nil 6,205 Investment in Securities 2,886 3,922 62 37 984 98 5 223 Nil 9 8,226 Deposits 218 1,059 583 326 387 863 44 2,483 1 1 5,965 Borrowings 80 4,911 100 205 8 Nil 10 Nil Nil Nil 5,314 Foreign Currency Assets 4 223 63 59 522 268 10 Nil Nil Nil 1,149 Foreign Currency Liabilities 50 930 50 6 8 Nil 10 558 Nil Nil 1,612 Note: Foreign currency assets include balances in respect of Advances and foreign currency liabilities include balances in respect

of Deposits & Borrowings

The maturity pattern of assets and liabilities as at March 31, 2011 is as under: (Rs. Crores)

Particulars Day 1 2 to 7 8 to 14 15 to 28 29 days Over 3 Over 6 Over 1 Over 3 Over 5 Total days days days and months months year and years years

upto 3 and upto and upto upto and upto months 6 months 1 year 3 years 5 years Advances 222 1,300 160 727 1,038 300 1,462 650 Nil Nil 5,859 Investment in Securities 2,803 907 103 106 187 191 25 518 1 20 4,861 Deposits 904 328 422 344 448 772 31 2,715 2 3 5,969 Borrowings 78 1,468 Nil 13 146 39 183 13 Nil Nil 1,940 Foreign Currency Assets 1 440 8 50 204 124 134 13 Nil Nil 974 Foreign Currency Liabilities 203 223 Nil 13 146 39 183 732 Nil Nil 1,539

Note: Foreign currency assets include balances in respect of Advances and foreign currency liabilities include balances in respect of Deposits & Borrowings




16. Exposure to Sensitive Sectors A) Exposure to Real Estate Sector (Rs. ‘000) Category As at As at March 31, 2012 March 31, 2011 Direct Exposure i) Residential Mortgages Lending fully secured by mortgages on residential property that is or will be occupied by the borrower or that is rented; 6,556 6,889 ii) Commercial Real Estate Lending secured by mortgages on commercial real estates (office buildings, retail space, multi-purpose commercial premises, multi-family residential buildings, multi-tenanted commercial premises, industrial or warehouse space, hotels, land acquisition, development and construction, etc.). Exposure would also include non-fund based (NFB) limits; Nil Nil iii) Investment in mortgage backed securities(MBS) and other securitized exposures Nil Nil a. Residential, b. Commercial Real Estate. Indirect Exposure Fund based and non-fund based exposures to National Housing Bank and Housing Finance Companies 14,853,950 11,853,217

Total Exposure to Real Estate Sector 14,860,506 11,860,106

B) Exposure to Capital Market (Rs. ‘000) Sr. No. Particulars As at As at March 31, 2012 March 31, 2011 1) Direct investment in equity shares, convertible bonds, convertible debentures and units of equity oriented mutual funds the corpus of which is not exclusively invested in corporate debt; ● Investment in equity shares 600 600 2) Advances against shares/bonds/debentures or other securities or on clean basis to individuals for investment in shares (including IPOs/ESOPs), convertible bonds, convertible debentures and units of equity oriented mutual funds; Nil Nil 3) Advances for any other purposes where shares or convertible bonds or convertible debentures or units of equity oriented mutual funds are taken as primary security; Nil Nil 4) Advances for any other purposes to the extent secured by the collateral security of shares or convertible bonds or convertible debentures or units of equity oriented mutual funds i.e. where the primary security other than shares/convertible bonds/convertible debentures/units of equity oriented mutual funds does not fully cover the advances; Nil Nil 5) Secured and unsecured advances to stockbrokers and guarantees issued on behalf of stockbrokers and market makers; 508,750 440,000 6) Loans sanctioned to corporate against the security of shares/ bonds/debentures or other securities or on clean basis for meeting promoter’s contribution to the equity of new companies in anticipation of raising resources; Nil Nil 7) Bridge loans to companies against expected equity flows/issues; Nil Nil 8) Underwriting commitments taken up by the Bank in respect of primary issue of shares or convertible bonds or convertible debentures or units of equity oriented mutual funds; Nil Nil 9) Financing to stockbrokers for margin trading; Nil Nil 10) All exposures to Venture Capital Funds (both registered and unregistered) Nil Nil Total Exposure to Capital Market 509,350 440,600




17. Country Risk Exposure Provision for Country Risk exposure in terms of RBI Master Circular on Disclosure in Financial Statements – Notes to Accounts

no. DBOD.BP.BC.No.16/ 21. 04. 018/ 2011-12 dated July 1, 2011 is as follows:

(Rs. ‘000) Risk Category Exposure (net) Provision held Exposure (net) Provision held as at as at as at as at March 31, 2012 March 31, 2012 March 31, 2011 March 31, 2011

Insignificant 5,540,072 3,200 9,056,816 6,000 Low 1,536,511 Nil 376,055 Nil Moderate 249,262 Nil 88,255 Nil High Nil Nil Nil Nil Very High Nil Nil Nil Nil Restricted Nil Nil Nil Nil Off-Credit Nil Nil Nil Nil

Total 7,325,845 3,200 9,521,126 6,000

18. Single and Group Borrower limits a) During the year, the Bank has exceeded the regulatory prescription of 15% of single borrower limit, but has remained

within the extended 20% limit for the following clients: ● Schneider Electric India Pvt. Ltd. ● Tata Steel Limited ● Cognizant Technology Solutions Pvt. Ltd.

b) During the year, the Bank has exceeded the regulatory prescription of 20% of single borrower limit, but has remained within the extended 25% limit for the following clients:

● Wireless Business Services Pvt. Ltd. ● Wireless Broadband Business Services Delhi Pvt. Ltd. c) Further, exposure to Housing Development Finance Corporation Limited continue to remain in excess of the prescribed

limits of 15% and the extended limit of 20%. For the above excesses, the Local Management Team has approved the exposures as per RBI Master Circular on Exposure

Norms DBOD No. Dir. BC. 7/13.03.00/ 2011-12 dated July 1, 2011. The Bank has also complied with all other requirements under the above mentioned circular.

During the financial year ended March 31, 2012, the Bank did not exceed the group borrower limits in respect of any of its clients.

19. Unsecured Advances Unsecured advances have been appropriately classified under ‘Schedule 9 – Advances’. During the year ended March 31, 2012,

the Bank has not given loans against intangible securities such as rights, licenses, authority etc.20. Deferred Tax The Deferred Tax Asset (DTA) as at March 31, 2012 amounting to Rs. 212,062 thousand (Previous year Rs. 127,626 thousand)

represents timing difference on account of depreciation on fixed assets and disallowances under section 43B of Income-tax Act, 1961. An increase in DTA for the year ended March 31, 2012 amounting to Rs. 84,436 thousand has been credited to the Profit and Loss account (Previous year Rs. 90,339 thousand credited to Profit and Loss account).

The components that gave rise to the deferred tax assets included in the balance sheet are as follows: (Rs. ‘000) Particulars As at As at March 31, 2012 March 31, 2011 Deferred tax assets Depreciation on fixed assets 26,042 22,069 Disallowances under section 43B of Income-tax Act, 1961 186,020 105,557 Deferred tax assets 212,062 127,626




21. Provision for Current Taxation (Rs. ‘000) Particulars For the year ended For the year ended March 31, 2012 March 31, 2011 Income Tax for the year 3,385,000 3,315,000 Wealth Tax for the year 800 850 Income tax adjustments for prior years (671,354) 54,724 Wealth tax adjustments for prior years (5,274) Nil

Total 2,709,172 3,370,574

22. The Reserve Bank of India had imposed a penal interest of Rs. 1,60,983/- for default in maintenance of Cash Reserve Ratio during the fortnight ended May 06, 2011 under section 42 of Reserve Bank of India Act, 1934.

23. Other expenditure in ‘Schedule 16 – Operating Expenses’ includes Head office administration expenditure of Rs. 420,000 thousand (Previous year Rs. 370,000 thousand) and data processing & network services expenses amounting to Rs. 308,526 thousand (Previous year Rs. 183,139 thousand) attributable to the Bank’s operations in India.

24. Miscellaneous Income includes service fee income of Rs 608,453 thousand (Previous year Rs. 494,166 thousand) from overseas branches and affiliates.

25. Outstanding commitments as of March 31, 2012 relating to securities purchase and sale contracts stood at Rs 8,023,798 thousand & 5,608,374 thousand respectively (March 31, 2011: Rs. 400,515 thousand and 1,446,820 thousand respectively)

26. Letters of Comfort issued The Bank has not issued any Letter of Comfort during the financial year ended March 31, 2012 (Previous year Rs. Nil).27. Draw down from Reserves During the Financial year ended March 31, 2012, there has been no drawdown from Reserves (Previous year Rs. Nil). Also refer

Schedule 2 – Reserves and Surplus.28. Disclosure of Complaints/Unimplemented awards of Banking Ombudsmen In accordance with RBI Master Circular on Customer Services in Banks DBOD No.Leg.BC.18/09.07.006/2011-12 dated July 01,

2011 details of customer complaints and awards passed by Banking Ombudsman are as follows: A. Customer complaints

Sr. no. Particulars For the year ended For the year ended March 31, 2012 March 31, 2011 a) No. of complaints pending at the beginning of the year Nil Nil b) No. of complaints received during the year 47 98 c) No. of complaints redressed during the year 47 98 d) No. of complaints pending at the end of the year Nil Nil

B. Awards passed by the Banking Ombudsmen

Sr. no. Particulars For the year ended For the year ended March 31, 2012 March 31, 2011 a) No. of unimplemented awards at the beginning of the year Nil Nil b) No. of awards passed by the Banking Ombudsmen during the year Nil Nil c) No. of awards implemented during the year Nil Nil d) No. of unimplemented awards at the end of the year Nil Nil

29. Segmental Reporting In accordance with the RBI guidelines, the Bank has identified two primary segments: Treasury and Corporate Banking. These

segments are identified based on nature of services provided, risk and returns, organizational structure of the Bank and the internal financial reporting system.

Treasury operations comprise derivatives trading, money market operations, investments in bonds, treasury bills, government securities and foreign exchange operations. The revenues of this segment consist of interest earned on investments and gains on sale of securities, profits/losses on exchange and derivative transactions. The principal expenses of this segment consist of interest expense on funds borrowed, occupancy expenses, personnel costs, other direct overheads and allocated expenses.



Corporate Banking primarily comprises funded and non-funded facilities, cash management activities and fee-based activities. Revenues of this segment consist of interest earned on loans given to clients and fees received from non-fund based activities like letters of credit, guarantees etc. and cash management services. The principal expenses of this segment consist of interest expenses on funds borrowed, occupancy expenses, personnel costs, other direct overheads and allocated expenses.

Unallocated expenses are reviewed for attribution to the primary segment on an ongoing basis.

The Bank does not have Retail banking and residual operations hence no segmental disclosures for Retail banking and other banking operations have been made.

(Rs. ‘000) Business Segments For the year ended March 31, 2012 For the year ended March 31, 2011 Treasury Corporate Unallocated Total Treasury Corporate Unallocated Banking Banking Total Segment Revenue 8,324,180 7,764,055 121,754 16,209,989 8,571,258 4,126,652 364,821 13,062,731 Segment Result (Operating Profit) 5,853,021 2,091,050 (27,926) 7,916,145 7,347,257 744,349 (5,89,520) 7,502,086 Provisions and Contingencies (39,621) 2,800 – (36,821) 44,503 (40,000) – 4,503 Income taxes (2,624,736) (3,280,235) Net profit 5,254,588 4,226,354 Segment Assets 91,017,351 68,524,168 2,237,395 161,778,914 54,419,941 65,814,483 1,688,150 121,922,574 Total Assets 161,778,914 121,922,574 Segment liabilities 46,841,577 73,511,938 959,149 121,312,664 14,058,261 71,448,211 1,204,445 86,710,917 Capital and Reserves 40,466,250 35,211,657 Total Liabilities 161,778,914 121,922,574

The Bank operates as a single unit in India and as such has no identifiable geographical segments subject to dissimilar risks and returns. Hence, no information relating to geographical segments are presented.

30. Subordinated Debt In accordance with RBI Master Circular on Disclosure in Financial Statements – Notes to Accounts DBOD.BP.BC No.

16/21.04.018/2011-12 dated July 01, 2011 details of Subordinated debt borrowings from Head office swapped in rupees is as under: As at March 31, 2012 (Rs. ‘000) Month of Allotment Final Maturity Amount Outstanding N.A. N.A. Nil

As at March 31, 2011 (Rs. ‘000)

Month of Allotment Final Maturity Amount Outstanding

November 2005 October 2011 1,114,875

Subordinated debt borrowings from Head office have been repaid on October 31, 2011, the maturity date, in accordance with the terms of borrowing and RBI guidelines.

31. The following disclosure in relation to securitization activities undertaken by the Bank are made in accordance with the RBI circular on Securitization of Standard Assets DBOD.NO.BP.BC.60/21.04.048/ 2005-06 dated February 1, 2006.

(Rs. ‘000) Particulars For the year ended For the year ended March 31, 2012 March 31, 2011 1) Total number of loans securitized Nil Nil 2) Book value of loans securitized Nil Nil 3) Sale Consideration (net of interest accrued) Nil Nil 4) Gains/(losses) on securitization recognized in the Profit and Loss account Nil Nil 5) Form of credit enhancement N.A. N.A. 6) Quantum of credit enhancement Nil Nil




32. Disclosures under Employee Benefits – Revised AS 15 The Bank has classified the various benefits provided to employees as under:- a) Defined Contribution Plan – Pension Fund During the year, the Bank has recognized Rs. 54,377 thousand (Previous year Rs. 49,041 thousand) in the Profit and Loss account

as Employers' Contribution to Pension Fund. b) Defined Benefit Plan – Contribution to Gratuity Fund In accordance with Accounting Standard 15 (revised 2005), actuarial valuation was done in respect of the defined benefit plan

based on the following assumptions:-

Particulars For the year ended For the year ended March 31, 2012 March 31, 2011 Discount rate (per annum) 8.50% 8.25% Basic salary increases allowing for price inflation For officers – 8% For officers – 7.5% and others-7% and others-6% Employee Turnover 8.00% 8.00% Normal retirement age 60 years 60 years

(Rs. ‘000) Reconciliation of Projected Benefit Obligation For the year ended For the year ended March 31, 2012 March 31, 2011 Projected Benefit Obligation at the beginning of the year 197,884 94,994 Current Service Cost 23,320 11,472 Interest Cost 17,464 6,570 Contribution by plan participation Nil Nil Actuarial Losses/(Gains) due to change in assumptions 2,614 104,706 Benefits Paid (19,037) (25,210) Past service cost Nil 5,352 Amalgamations Nil Nil Curtailments Nil Nil Settlements Nil Nil Projected Benefit Obligation at the end of year 222,245 197,884

(Rs. ‘000) Plan Asset at Fair Value For the year ended For the year ended March 31, 2012 March 31, 2011 Plan Asset at beginning of year 84,738 85,147 Expected Return on Plan Asset 11,542 7,543 Employer Contribution 121,166 8,681 Employee Contribution Nil Nil Benefits Payment (19,037) (25,210) Asset Gains/(Losses) (6,676) 8,577 Amalgamations Nil Nil Settlements Nil Nil Ending Asset 191,733 84,738

(Rs. ‘000) Amounts recognized in the Balance sheet For the year ended For the year ended March 31, 2012 March 31, 2011 Projected Benefit Obligation at the end of year 222,245 197,884 Ending Asset 191,733 84,737 Fund Status asset/(liability) (30,512) (113,147) Unrecognized past service cost – non vested benefits 791 1,186 Asset/(liability) recognized in the Balance sheet (29,721)* (111,961)*

* the Bank has contributed Rs. 30,512 thousand (Previous year Rs. 121,166 thousand) to the fund on March 30, 2012




(Rs. ‘000) Amounts recognized in the Profit and Loss Account For the year ended For the year ended March 31, 2012 March 31, 2011

Current Service Cost 23,320 11,472 Interest Cost 17,464 6,570 Expected return on plan asset (11,542) (7,543) Net Actuarial losses/(gains) recognized in the year 9,290 96,129 Past Service Cost 395 4,166 Effect of Curtailments Nil Nil Income (-)/Expenses (+) recognized in the statement of Profit and Loss account 38,927 110,794

Experience Adjustments (Rs. ‘000) Particulars For the year For the year For the year For the year For the year ended March ended March ended March ended March ended March 31, 2012 31, 2011 31, 2010 31, 2009 31, 2008

Present Value of defined benefit obligation 222,245 197,884 94,994 112,813 100,324 Fair Value of plan assets 191,733 84,737 85,147 97,987 99,622 (Surplus)/deficit in the plan 30,512 113,147 9,847 14,826 702 Experience Adjustment Liability Experience (Gain)/Loss 2,614 104,706 (3,127) 5,664 3,970 Asset Asset Gain/(Loss) (6,676) 8,577 12,820 2,050 2,899

Investment details of plan assets Majority of the plan assets are invested in Government securities and corporate bonds.

c) Provident Fund In accordance with Accounting Standard 15 (revised 2005), actuarial valuation was done in respect of the defined benefit

plan based on the following assumptions:-

Particulars For the year ended March 31, 2012

Discount rate (per annum) 8.50% Employee Turnover 8.00% Normal retirement age 60 years

Reconciliation of Projected Benefit Obligation For the year ended March 31, 2012

Projected Benefit Obligation at the beginning of the year 773,948 Current Service Cost 56,196 Interest Cost 57,588 Actuarial (Gain)/Loss (7,272) Benefits Paid (56,061) Employee Contribution 149,277 Amalgamations Nil Transfer In 39,949 Settlements Nil Change in Reserves (11,390) Projected Benefit Obligation at the end of year 1,002,235




(Rs. ‘000) Plan Asset at Fair Value For the year ended March 31, 2012 Plan Asset at beginning of year 773,948 Return on Plan Asset 70,115 Employer Contribution 56,196 Transfer In 39,949 Employee Contribution 149,277 Asset Gains/(Losses) (29,895) Benefits Payment (56,061) Amalgamations Nil Settlements Nil Change in Reserves Nil Ending Asset 1,003,529

(Rs. ‘000) Amounts recognized in the Balance sheet For the year ended March 31, 2012 Projected Benefit Obligation at the end of year 1,002,234 Ending Asset 1,003,529 Fund Status surplus/(deficit) 1,295 Asset/(liability) recognized in the Balance sheet 1,295

(Rs. ‘000) Amounts recognized in the Profit and Loss Account For the year ended March 31, 2012 Current Service Cost 56,196 Interest Cost 57,588 Expected return on plan asset (70,115) Net Actuarial losses /(gains) recognized in the year 22,623 Past Service Cost Nil Effect of Curtailments/Settlements Nil Income (-)/Expenses (+) recognized in the statement of Profit and Loss account 66,292

The Bank operates a Provident Fund Scheme to which it contributes an amount on monthly basis at a determined rate. The contribution is remitted to a trust established by the Bank for this purpose and such contribution is charged to Profit and Loss account. All employees of the Bank are eligible to receive benefits under the Provident Fund. Interest is payable to the members of such trust at a rate which shall not be lower than the statutory rate of interest declared by Central Government. During the year ended March 31, 2012 the bank has contributed Rs. 58,761 thousand (Previous year Rs. 42,586 thousand).

d) Compensated Absences The Bank has provided for sick leave and privilege leave for all its eligible employees, based on valuation carried out by

an independent actuary. Sick Leave In accordance with Accounting Standard 15 (revised 2005), actuarial valuation was done based on the following assumptions:-

Particulars For the year ended For the year ended March 31, 2012 March 31, 2011

Discount rate (per annum) 8.50% 8.25% Basic salary increases allowing for price inflation For officers – 8% For officers – 7.5% and others-7% and others-6% Employee Turnover 8.00% 8.00% Normal retirement age 60 years 60 years




The provision for sick leave as on March 31, 2012 is Rs. 32,025 thousand (Previous year Rs. 26,444 thousand). The increase in the provision of Rs. 5,581 thousand is debited to Profit and Loss account for the year ended March 31, 2012. (Previous year Rs. 404 thousand credited to Profit and Loss account.)

Privilege Leave In accordance with Accounting Standard 15 (revised 2005), actuarial valuation was done in respect of the defined benefit

plan based on the following assumptions:-

Particulars For the year ended For the year ended March 31, 2012 March 31, 2011

Discount rate (per annum) 8.50% 8.25% Basic salary increases allowing for price inflation For officers – 8% For officers – 7.5% and others-7% and others-6% Employee Turnover 8.00% 8.00% Normal retirement age 60 years 60 years

(Rs. ‘000) Reconciliation of Projected Benefit Obligation For the year ended For the year ended March 31, 2012 March 31, 2011

Projected Benefit Obligation at the beginning of the year 121,182 Nil Current Service Cost 24,953 116,218 Interest Cost 11,856 9,588 Contribution by plan participation Nil Nil Actuarial (Gains)/Losses due to change in assumptions 2,066 Nil Benefits Paid (4,851) (4,624) Past service cost Nil Nil Amalgamations Nil Nil Curtailments Nil Nil Settlements Nil Nil Projected Benefit Obligation at the end of year 155,206 121,182

(Rs. ‘000) Plan Asset at Fair Value For the year ended For the year ended March 31, 2012 March 31, 2011

Plan Asset at beginning of year Nil Nil Expected Return on Plan Asset Nil Nil

Employer Contribution Nil Nil Employee Contribution Nil Nil Benefits Payment Nil Nil Asset Gains/(Losses) Nil Nil Amalgamations Nil Nil Settlements Nil Nil Ending Asset Nil Nil Total actuarial gain/(loss) recognized immediately Nil Nil

(Rs. ‘000) Amounts recognized in the Balance sheet For the year ended For the year ended March 31, 2012 March 31, 2011

Projected Benefit Obligation at the end of year 155,206 121,182 Ending Asset Nil Nil Funded Status asset/(liability) (155,206) (121,182) Unrecognized past service cost – non vested benefits Nil Nil Liability (-)/Asset (+) recognized in Balance Sheet (155,206) (121,182)




(Rs. ‘000)

Amounts recognized in the Profit and Loss Account For the year ended For the year ended March 31, 2012 March 31, 2011

Current Service Cost 24,953 116,218 Interest Cost 11,856 9,588 Expected return on plan asset Nil Nil Net Actuarial (gains)/losses recognized in the year 2,066 Nil Past Service Cost Nil Nil Effect of Curtailments Nil Nil Income (-)/Expenses (+) recognized in the statement of Profit and Loss account 38,875 125,806

(Rs. ‘000)

Experience Adjustments For the year ended For the year ended March 31, 2012 March 31, 2011

Present Value of defined benefit obligation 155,206 121,182 Fair Value of plan assets Nil Nil (Surplus)/deficit in the plan 155,206 121,182 Experience Adjustment

Liability Experience (Gain)/Loss 2,066 Nil

Asset Asset (Gain)/Loss Nil Nil

33. Related Party Disclosures :

a) Head Office*

Bank of America N.A. and its branches.

b) Ultimate Controlling Enterprise*

Bank of America Corporation

c) Subsidiaries of Head Office

● Banc of America Securities (India) Private Limited (BASIL)

● Bank of America Singapore Limited

● Banc of America Securities Asia Limited

d) Fellow Subsidiaries of Head Office

● BA Continuum India Private Limited (BA Continuum Private Limited has been merged with BA Continuum India Private Limited w.e.f. February 8, 2012, the appointed date of merger being April 1, 2009)

● DSP Merrill Lynch Limited

● DSP Merrill Lynch Capital Limited

e) Key Management Personnel**

Mrs. Kaku Nakhate, Chief Executive Officer




Transactions with related parties are in the ordinary course of business (Current year figures are shown in bold. Previous year’s figures are shown in brackets):

(Rs. ‘000) Items/Related Party Subsidiaries of Fellow Subsidiaries Head office of Head office

Transactions during the year Sales/Redemption of Securities 30,950,154 148,864 (15,094,014) (161,242) Purchase of securities 974,390 Nil (1,788,062) (Nil) Purchase of Car Nil 1,450 (Nil) (Nil) Term Deposits (note 1) Nil 25,369,892 (Nil) (52,643,987) Documentary Collections Nil 264,019 (Nil) (99,747) Guarantees issued Nil 3,000 (Nil) (10,168) Interest Paid Nil 672,033 (Nil) (366,405) Depository Participant charges Nil 20 (Nil) (Nil) Commission Received Nil 542 (Nil) (757) Bank charges Received Nil 20 (Nil) (155) Reimbursement of Expenses Nil 2,394 (Nil) (Nil) Rendering of Services 2,573 83,064 (3,083) (67,402) Receipt of Services Nil 149,680 (Nil) (118,780) Outstanding at the year end Term Deposits (note 1) Nil 9,328,679 (Nil) (10,633,679) Bank Balances 28,315 1,826,818 (31,107) (2,633,335) Other Assets 714 12,051 (389) (12,065) Other Liabilities Nil 69,157 (Nil) (54,028) Guarantees Nil 30,914 (Nil) (29,564) Maximum outstanding during the year Term Deposits (note 1) Nil 24,528,679 (Nil) (19,163,779) Guarantees Nil 30,914 (Nil) (29,564)

Note 1: Includes deposits which are lien marked.




Of the above items, transactions in excess of 10% of the related party transactions are as under:

Particulars Subsidiaries of Fellow Subsidiaries Head office# of Head office# Sales/Redemption of Securities Bank of America Singapore Limited 30,950,154 Nil

(15,094,014) (Nil) DSP Merrill Lynch Capital Limited Nil 148,864

(Nil) (161,242) Purchase of securities Bank of America Singapore Limited 974,390 Nil (1,788,062) (Nil) Purchase of Car DSP Merrill Lynch Limited Nil 1,450 (Nil) (Nil) Term Deposits BA Continuum India Private Limited Nil 25,369,892 (Nil) (46,210,200) Documentary Collections BA Continuum India Private Limited Nil 264,019 (Nil) (37,229) BA Continuum Private Limited Nil Nil (Nil) (62,519) Guarantees issued BA Continuum India Private Limited Nil 3,000 (Nil) (1,381) BA Continuum Private Limited Nil Nil (Nil) (8,787) Interest Paid BA Continuum India Private Limited Nil 672,033 (Nil) (337,644) Depository Participant Charges DSP Merrill Lynch Limited Nil 20 (Nil) (Nil) Commission Received BA Continuum India Private Limited Nil 542 (Nil) (230) BA Continuum Private Limited Nil Nil (Nil) (527) Bank charges Received DSP Merrill Lynch Limited Nil 19 (Nil) (155) Reimbursement of Expenses DSP Merrill Lynch Limited Nil 2,394 (Nil) (Nil) Rendering of Services BA Continuum India Private Limited Nil 29,413 (Nil) (27,494) DSP Merrill Lynch Limited Nil 53,692 (Nil) (39,907) Banc of America Securities (India) Private Limited 2,590 Nil (2,711) (Nil) Banc of America Securities Asia Limited Nil Nil (372) (Nil) Receipt of Services DSP Merrill Lynch Limited NIL 149,680 (NIL) (118,780)




* As per the RBI circular DBOD.BP.BC.No.16/21.04.018/2011-12 dated July 1, 2011 on ‘Disclosure in Financial Statements – Notes to Accounts’, the Bank has not disclosed details pertaining to the related party disclosure where there is only one entity/person in any category of related parties.

** Transactions details of key management personnel have not been given and the only the relationship with the related party is disclosed keeping in view secrecy and confidentiality clauses in accordance with the Guidelines on Compliance with the Accounting Standards (AS) by Banks circular No.DBOD.BP.BC.89/21.04.018/2002-03 dated March 29, 2003.

# As per Accounting Standards Interpretation (‘ASI’) 13, a specific related party transaction is disclosed as material related party transaction, wherever it exceeds 10% of total related party transactions in that category.

34. Leases Information in respect of commercial and residential branch premises taken on operating lease of non cancellable nature is as

under:

(Rs. ‘000) Sr. No. Future minimum lease payments As at As at March 31, 2012 March 31, 2011

1) Up to 1 year Nil Nil 2) More than 1 year and up to 5 years Nil Nil 3) More than 5 years Nil Nil

● The lease payments, recognized in the Profit and Loss account: Rs. 167,994 thousand (Previous year Rs. 139,489 thousand). ● The Bank has not sub-leased any part of the above premises. ● There are no lease payments recognized in the statement of Profit and Loss for contingent rent. ● The terms of renewal/purchase options and escalation clauses are those normally prevalent in similar agreements. ● There are no undue restrictions or onerous clauses in the agreements

35. Other Fixed Assets (including furniture & fixtures) Other Fixed Assets under Schedule 10(II) include software, the details of which are given below: (Rs. ’000) Particulars For the year ended For the year ended March 31, 2012 March 31, 2011

At Cost as at March 31, of preceding year 66,298 43,426 Additions during the year 6,378 23,307 Deductions during the year (-) (435) At Cost as at March 31 72,676 66,298 Accumulated amortization (42,744) (31,637) Written down value as at March 31 29,932 34,661

36. Employee share-based payments

The eligible employees of the Bank have been granted stocks of the ultimate holding company, Bank of America Corporation, under employee share-based payment schemes. During the year, the Bank has recognized an amount of Rs. 338,772 thousand under the head ‘Payments to and provisions for employees’, as cost towards share-based payments under Schedule 16 – Operating Expenses.

37. Provisions, Contingent liabilities and Contingent Assets Contingent Liabilities stated in Schedule 12 are as under:

a) Claims against the Bank not acknowledged as Debts It includes claims/demands raised by Income tax authorities which are disputed by the Bank.

b) Liability on account of forward exchange and derivative contracts The Bank enters into forward exchange contracts, options, currency swaps, currency futures and interest rate swaps with

interbank participants on its own account and for its customers.





Forward exchange contracts are commitments to buy or sell foreign currency at a future date at a contracted rate. Swaps are commitments to exchange cash flows by the way of interest/principal in one currency against another, based on predetermined rates.

Interest rate swaps are commitments to exchange fixed and floating interest rate cash flows. The notional amounts that are recorded as contingent liabilities are used for the calculation of interest.

c) Guarantees given on behalf of Constituents, Acceptances, Endorsements and other obligations As a part of its corporate banking activities, the Bank issues documentary credit and guarantees on behalf of its customers.

Documentary credits such as letters of credit enhance the credit standing of the customer of the Bank. Guarantees generally represent irrevocable assurances that the Bank will make payment in the event of customer failing to fulfill its financial or performance obligations.

d) Other items for which the Bank is contingently liable ● Committed Lines of Credit

● Bills Re-discounted

Movement in Provision for Contingent Liabilities (Rs. ‘000) Particulars As at As at March 31, 2012 March 31, 2011

Opening Provision 20,743 21,127 Additions Nil Nil Reversals 65 384 Closing Provision 20,678 20,743

38. Floating Provisions (Rs. ‘000) Sr. No. Particulars As at As at March 31, 2012 March 31, 2011

1) Opening balance in the floating provisions account Nil Nil 2) The quantum of floating provisions made in the accounting year Nil Nil 3) Amount of draw down made during the accounting year Nil Nil 4) Closing balance in the floating provision account Nil Nil

39. Additional disclosure on call money as required for Primary Dealers vide RBI Master circular on Operational Guidelines to Primary Dealers no. IDMD.PDRD. 01 /03.64.00/2011-12 dated July 1, 2011.

(Rs. crores) For the year ended March 31, 2012 Average* Peak Borrowing 516 2,450 Lending 107 720

(Rs. crores)

For the year ended March 31, 2011 Average* Peak

Borrowing 220 545 Lending 214 500

* Average is calculated in respect of days on which balance was outstanding.

40. Micro, Small and Medium Enterprises Development Act, 2006 There are no delays in payments to micro and small enterprises as required to be disclosed under The Micro, Small and Medium

Enterprises Development Act, 2006. The determination has been made to the extent such parties were identified based on the information available.

41. The Bank is not into the business of Bancassurance and has not received any fees/remuneration in respect of the same during the financial year ended March 31, 2012. (Previous year Rs. Nil)




42. Concentration of Deposits, Advances, Exposures and NPAs 1) Concentration of Deposits (Rs. ‘000) Particulars As at As at March 31, 2012 March 31, 2011

Total Deposits of twenty largest depositors 33,162,209 33,951,651 Percentage of Deposits of twenty largest depositors to Total Deposits of the bank 55.60% 56.67%

2) Concentration of Advances (Rs. ‘000) Particulars As at As at March 31, 2012 March 31, 2011

Total Advances to twenty largest borrowers 69,068,266 58,550,152 Percentage of Advances to twenty largest borrowers to Total Advances of the bank 59.75% 56.48% 3) Concentration of Exposures (Rs. ‘000) Particulars As at As at March 31, 2012 March 31, 2011

Total Exposure of twenty largest borrowers/customers 69,139,338 58,550,152 Percentage of Exposure to twenty largest borrowers/customers to Total Exposure of the bank on borrowers/customers 58.46% 56.48%

4) Concentration of NPAs (Rs. ‘000) Particulars As at As at March 31, 2012 March 31, 2011

Total Exposure of top four NPA accounts * 6,978 6,978

* Only one account is NPA.

I. Sector-wise NPA Sr. No. Sector Percentage of NPAs to Percentage of NPAs to Total Advances in that Total Advances in that sector as at March 31, 2012 sector as at March 31, 2011

1 Agriculture and allied activities Nil Nil 2 Industry – Engineering Sector 0.10% 0.12% 3 Services Nil Nil 4 Personal loans Nil Nil

Note: The NPA is disclosed under the category ‘Engineering’ under the DSB return on Asset Quality – IV submitted to RBI on a monthly basis.

II. Overseas Assets, NPAs and Revenue (Rs. ‘000) Particulars March 31, 2012 March 31, 2011

Total Assets Nil Nil Total NPAs Nil Nil Total Revenue Nil Nil

III. Off-balance sheet SPVs (Domestic & Overseas) sponsored – NIL




43. Provision Coverage ratio

As on March 31, 2012 (Rs. ‘000)

1 2 3 4 5

Gross NPA @ Specific Provisions held including Ratio of (4) plus Technical/ provisions for Diminution in fair to (3) Prudential value of the restructured accounts Write-off classified as NPAs plus Technical/ Prudential write-off

1. Sub-Standard Advances Nil Nil Nil

2. Doubtful Advances (a+b+c) Nil Nil Nil a < 1 year Nil Nil Nil b 1-3 years Nil Nil Nil c >3 years Nil Nil Nil

3. Advances classified as Loss Assets 6,978 6,978 100%

4. Total 6,978 6,978 100%

5. Floating Provisions for Advances (only to the extent they are not used as Tier II Capital) Nil

6. DICGC/ECGC claims received and held pending adjustments Nil

7. Part payment received and kept in Suspense Account for any other similar account Nil

8. Total (Sum of column 4 of Row 4 + Row 5 + Row 6 + Row 7) 6,978

9. Provision Coverage Ratio {(8/Total of column 3 of Row 4)*100} 100%

@ Gross NPAs to be computed in terms of the Master circular on Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances DBOD.BP.BC.12/21.04.048/2011-12 dated July 01, 2011

44. Unamortised Pension and Gratuity Liabilities – Nil

45. Previous year figures have been regrouped and reclassified wherever necessary to confirm to current year’s presentation.

For B S R & Co. For BANK OF AMERICA, N.A. – INDIA BRANCHES Chartered Accountants Firm Registration No. 101248W Sd/- Sd/- Sd/- N Sampath Ganesh Kaku Nakhate Kumar ShahPartner Chief Executive Officer Chief Financial OfficerMembership No: 042554 Mumbai: June 28, 2012 Mumbai: June 28, 2012 Mumbai: June 28, 2012



PILLAR III – MARKET DISCIPLINE FOR THE YEAR ENDED MARCH 31, 2012

BASEL II – PILLAR III DISCLOSURES1. Scope of applicationQualitative DisclosuresThe Basel II disclosures contained herein relate to Bank of America, N.A. – India Branches herein referred to as the ‘Bank’ or ‘BANA’ for the year ended March 31, 2012. These are compiled in accordance with Reserve Bank of India (the ‘RBI’) regulations on Prudential guidelines on Capital Adequacy and Market Discipline – New Capital Adequacy Framework (‘NCAF’) vide DBOD. No. BP.BC. 11/ 21.06.001/ 2011-12 dated July 1, 2011. The provisions of Accounting Standard (AS) 21 – Consolidated Financial statements, AS 23 Accounting for Investments in Associates in Consolidated Financial statements & AS 27 – Financial Reporting of Interest in Joint Ventures, issued by The Institute of Chartered Accountants of India (‘ICAI’) and notified by the Companies (Accounting Standards) Rules 2006 do not apply to the Bank. Further the Bank does not have any interest in insurance entities. Hence the qualitative disclosures are only made for BANA as a standalone entity.Quantitative Disclosures For the reasons mentioned above, the quantitative disclosures are only made for BANA as a standalone entity2. Capital StructureQualitative DisclosuresThe capital funds of the Bank include the following:Tier I Capital 1. Interest-free funds from Head office specifically for the purpose of meeting the capital adequacy norms prescribed by the

Reserve Bank of India (RBI). These include amount brought in as start-up capital and Tier 1 capital augmented by Head office.2. Statutory reserves upon transfer of 25% of profits of each year, in accordance with Section 17 of The Banking Regulation

Act, 1949.3. Remittable surplus retained in Indian books which the Bank has undertaken not to repatriate and credited to a separate account

titled as ‘Amount retained in India for the purposes of Capital to Risk Weighted Assets Ratio (CRAR)’.4. Capital reserves representing surplus arising out of sale of assets in India and held in a separate account and not eligible for

repatriation so long as the Bank functions in India.Tier II Capital1. Revaluation reserves on account of revaluation of the premises owned by the Bank. As per the RBI guidelines a discount of

55 percent is considered while determining the value for inclusion in Tier II capital. 2. Reserves included under Tier II comprise of reserves that are not attributable to the actual diminution in value or identifiable

potential loss in any specific asset and are available to meet unexpected losses. The Bank includes the ‘Provision on Standard Assets’, ‘Provisions held for Country Exposures’ and ‘General Provision’ in Tier II capital. These are reckoned for Tier II capital up to a maximum of 1.25% of the total risk-weighted assets.

3. Subordinated debt includes amounts borrowed from Head office and swapped in rupees. These borrowings are of initial maturity of not less than 5 years and are progressively discounted in accordance with the RBI guidelines based on their residual maturity. Subordinated debt is considered for inclusion in Tier 2 capital up to a limit of 50% of Tier 1 capital.

Quantitative Disclosures ● Tier I Capital

(Rs. ‘000) Particulars 31-Mar-12 31-Mar-11 Amount brought in as start-up capital 2,000 2,000 Tier I Capital augmented by Head office 9,851,492 9,851,492 Statutory Reserves 8,518,094 7,204,447 Amount retained in India for the purposes of CRAR 14,875,501 9,077,363 Capital Reserves 3,221,517 3,221,517 36,468,604 29,356,819 Less: Deductions Deferred Tax Asset 212,062 127,626 Software 29,932 34,661 Suspense assets 1,506 13,377 243,500 175,664 Tier 1 Capital 36,225,104 29,181,155



● Tier II Capital (Rs. ‘000) Particulars 31-Mar-12 31-Mar-11

Revaluation Reserves 25,515 25,515 General Provision 6,000 6,000 Provision held for Country Risk 3,200 6,000 Provision for Standard Assets 767,415 767,415 Subordinated Debt Nil Nil

Tier 2 Capital 802,130 804,930

● Debt capital instruments eligible for inclusion in Upper Tier II capital (Rs. ‘000) Particulars 31-Mar-12 31-Mar-11

Total amount outstanding Nil Nil Of which amount raised during the year Nil Nil Amount eligible to be reckoned as Capital funds Nil Nil

● Subordinated debt eligible for inclusion in Lower Tier II capital (Rs. ‘000) Particulars 31-Mar-12 31-Mar-11

Total amount outstanding Nil 1,114,875 Of which amount raised during the year Nil Nil Amount eligible to be reckoned as Capital funds Nil Nil

Note: Subordinated debt borrowings from Head office have been repaid on October 31, 2011, the maturity date, in accordance with the terms of borrowing and RBI guidelines.

● Total Eligible Capital (Rs. ‘000) Particulars 31-Mar-12 31-Mar-11

Tier I 36,225,104 29,181,155 Tier II 802,130 804,930

Total 37,027, 234 29,986,085

3. Capital Adequacy

Qualitative disclosures

Internal Capital Adequacy Assessment Process

The Bank is required to comply with all applicable laws and regulations in India including guidelines issued by RBI and other relevant regulatory bodies.

The Local Management Team (LMT) of the Bank is responsible for ensuring that branch complies with global policies, procedures and corporate governance practices. These include policies relating to Basel II and, in particular, the ICAAP framework described in Bank of America Corporation (BAC) “Interim Internal Capital Adequacy Assessment Process (ICAAP) for International Entities”. The LMT is comprised of members from various key functional areas of the Bank such as Treasury, Risk, Corporate Banking, Finance, Operations and others. The Committee is headed by the Country Manager.

ICAAP establishes a framework for banks to perform a comprehensive assessment of the risks they face and relate capital to those risks. The capital analysis performed by the Bank is expected to encompass all risks, not just the risks captured by the Basel II Pillar 1 minimum regulatory capital calculation. Successful risk identification and measurement requires having a comprehensive process to quantify, measure and aggregate these various risks in order to ensure that the Bank’s capital resources are sufficient to cushion volatility in earnings due to unexpected losses.




Pillar 1

The Bank has adopted Standardized Approach (SA) for credit risk, Standardized Duration Approach (SDA) for market risk and Basic Indicator Approach (BIA) for operational risk for computing its capital requirement.

Under the Standardized Approach for credit risk, ratings assigned by the eligible external credit rating agencies support the measure of credit risk. The Bank relies upon the ratings issued by the external credit rating agencies specified by the RBI for assigning risk weights for capital adequacy purposes under the Basel II guidelines. The risk weights applicable for claims against bank, sovereign, corporate, retail portfolio (employee loans) are as per the Basel II guidelines.

In compiling the credit exposure, the Bank does not reduce cash collateral received against credit exposures as eligible credit mitigants, as permitted by the RBI.

During the year ended March 31, 2012, the Bank has invested in Pass Through Certificates of third party originated securitisation transactions

Under the Standardized Duration Approach for computing the capital requirement for market risk, the Bank has adopted the “duration” method for measuring interest rate risk.

The minimum capital requirement is computed in terms of:

● "Specific risk" charge for each security, to protect against an adverse movement in the price of an individual security owing to factors related to the individual issuer.

● "General market risk" charge towards interest rate risk in the portfolio, where long and short positions in different securities or instruments can be offset.

Under the Basic Indicator Approach, the Bank holds capital for operational risk equal to 15% of average positive gross annual income for the previous three financial years.

Quantitative disclosures (Rs. ‘000) Particulars 31-Mar-12 31-Mar-11

Capital requirements for credit risk: – Portfolios subject to standardised approach 14,632,279 12,761,986 – Securitisation exposures 50,769 Nil

Capital requirements for market risk: (Standardised duration approach) – Interest rate risk 3,996,004 6,153,915 – Foreign exchange risk (including gold) 600,000 400,000 – Equity risk 90 90

Capital requirements for operational risk: 1,767,409 1,345,751 (Basic indicator approach) Total capital requirements 21,046,551 20,661,742 Total capital ratio 17.59% 14.51% Tier I capital ratio 17.21% 14.12%

4. Credit Risk: General DisclosuresQualitative DisclosuresCredit RiskThe Bank has comprehensive policies in place for measurement, reporting, monitoring and mitigation of credit risk.

The Bank is focused on quality of assets, return on those assets/risk capital required on account of these assets and select target segment of corporate with strong credit profiles. The Bank examines its portfolio and monitors these factors on an on-going basis. Consequently the Bank exits relationships on account of credit concerns or inadequate returns on the risk capital required to continue the lending relationship, as and when warranted. The Bank believes that this exercise has improved the overall quality of credit portfolio, and has also made credit portfolio more resilient to industry and economic downturns.





The Bank manages credit risk based on the risk profile of the borrower or counterparty, repayment sources, the nature of underlying collateral, and other support given current events, conditions and expectations. Credit risk management begins with an assessment of the credit risk profile of the borrower or counterparty based on an analysis of their financial position. As part of the overall credit risk assessment of a borrower or counterparty, credit exposures are assigned a risk rating and are subject to approval based on defined credit approval standards. Subsequent to loan origination, risk ratings are monitored on an ongoing basis. If necessary, risk ratings are adjusted to reflect changes in the financial condition, cash flow or financial situation of a borrower or counterparty. Risk ratings are also a factor in determining the allowance for credit losses.

The Bank has a policy of internal rating on a scale of Risk Rating (RR) 1-11, and the RR is continuously monitored, with a change in RR as and when it is warranted. Exposures with RR of 8 or more are subject to intensive scrutiny by the senior management.

Tight credit risk management controls as above have ensured strong credit risk management systems as demonstrated by very low level of non-performing assets of 0.01% (Previous year 0.01%) of total advances. Net Non Performing Asset (NPA) levels have been consistently at zero percent over the past several years. The Bank’s strong credit risk management systems are reflected in the selective client base, stringent and regular monitoring and conservative Criticized Asset policy. As a result, Bank is able to start tracking potential problem assets in the initial stage itself and can manage early exit, resulting in low or nil NPAs.

NORMS FOR DETERMINING WHEN TO CLASSIFY VARIOUS TYPES OF ASSETS AS NON-PERFORMING

● Term loans are treated as non-performing if the interest and/or installments of principal remain overdue for a period of more than 90 days.

● Cash credits & overdrafts are treated as non-performing if these remain out of order for a period of more than 90 days.

An account will be treated “out of order” if the outstanding balance remains continuously in excess of the sanctioned limit/drawing power. In case where the outstanding balance is less than the sanctioned limit/drawing power, but there are no credits continuously for three months as on balance-sheet date or credits are not enough to cover the interest debited during the same period, these accounts will be treated as out of order.

● Bills purchased/discounted are treated as non-performing if the bill remains overdue and unpaid for a period of more than 90 days during the financial year.

● Any overdue receivables representing positive mark to market value of a foreign exchange and interest rate derivative contracts will be treated as non-performing asset if these remain unpaid for 90 days or more, upon becoming due.

Any other facility will be treated as non-performing if any amount to be received remains overdue for a period of more than 90 days during the financial year.

Quantitative Disclosures

● Total Gross credit exposures # (Rs. ‘000) Particulars 31-Mar-12 31-Mar-11

Fund Based 160,453,397 137,409,769

Non-Fund Based * 195,631,022 162,989,789

● Geographic distribution (Rs. ‘000)

Particulars March 31, 2012 March 31, 2011

Domestic Overseas Domestic Overseas

Fund Based 160,453,397 Nil 137,409,769 Nil

Non-Fund Based * 195,631,022 Nil 162,989,789 Nil

# Un-realized gains on derivative instruments are considered on a gross basis in arriving at the credit exposure, which are presented net of un-realized losses product-wise under “Other Assets” or “Other Liabilities” on the Balance Sheet.

* Includes market as well as non-market related exposures.



Industry wise distribution of Exposures (Rs. ‘000)

Industry March 31, 2012 March 31, 2011 Fund Based Non-Fund Fund Based Non-Fund Based* Based*

All Engineering 7,217,744 7,311,142 6,227,996 4,714,806 Banks 72,397,266 150,113,058 62,219,243 125,881,689 Basic Metal & Metal Products 4,480,702 3,407,083 1,773,703 4,540,712 Chemicals & Chemical Products 6,318,960 2,283,071 4,576,767 1,783,121 Construction 470,765 585,681 34,075 324,108 Food Processing 1,229,145 19,474 2,241,100 15,627 Infrastructure 16,343,261 843,055 12,108,707 1,106,553 Leather & Leather Products 2,044,138 951 1,918,609 19,500 Non-Banking Financial Companies 15,800,352 19,114,715 14,121,487 15,904,158 Paper & Paper Products 1,627,045 8,517 1,086,610 17,921 Petroleum, Coal Products & Nuclear Fuel 4,115,436 1,308,410 4,172,159 900,729 Employee Loans 11,502 Nil 11,617 Nil Rubber, Plastic & Their Products 3,816 737,091 1,767,632 141,118 Services 8,365,182 6,126,255 7,766,930 3,984,552 Sovereign 6,194,318 458,116 6,443,078 636,882 Textiles 1,246,969 1,222 312,854 227 Vehicles, Vehicle parts & Transport Equipments 6,883,295 2,260,044 2,479,002 1,413,268 Other Industries 5,703,501 1,053,137 8,148,200 1,604,818

Total 160,453,397 195,631,022 137,409,769 162,989,789

* Includes market as well as non-market related exposures.

● Residual contractual maturity breakdown of assets (Rs. ‘000) Particulars 31-Mar-12 31-Mar-11 Advances Investments Advances Investments

Next day 1,040,474 28,858,543 2,219,923 28,030,258 2 to 7 days 5,925,905 39,216,539 13,006,174 9,070,139 8 to 14 days 4,107,406 620,333 1,596,113 1,028,251 15 to 28 days 5,813,856 371,001 7,269,709 1,061,882 29 days and up to 3 months 20,408,089 9,850,998 10,378,058 1,874,231 Over 3 months and upto 6 months 4,585,326 978,628 3,005,983 1,910,563 Over 6 months and upto 1 year 18,540,270 49,398 14,619,803 249,833 Over 1 year and upto 3 years 1,632,348 2,225,481 6,495,642 5,178,309 Over 3 years and upto 5 years – 653 Nil 5,094 Over 5 years – 86,581 Nil 197,382

Total 62,053,674 82,258,155 58,591,405 48,605,942

● Amount of NPAs (Gross) (Rs. ‘000) Category of NPA 31-Mar-12 31-Mar-11

Substandard Nil Nil Doubtful 1 Nil Nil Doubtful 2 Nil Nil Doubtful 3 Nil Nil Loss 6,978 6,978





● Net NPAs – Nil

● NPA ratios – Gross NPA to Gross Advances: 0.01% – Net NPA to Net Advances: Nil

● Movement of NPAs (Rs. ‘000) Particulars 31-Mar-12 31-Mar-11

Movement of NPAs (Gross) – Opening balance 6,978 6,978 – Additions during the year Nil Nil – Recoveries/write offs Nil Nil – Closing balance 6,978 6,978 Movement of provisions for NPAs (excluding provisions on standard assets) – Opening balance 6,978 6,978 – Provisions made during the year Nil Nil – Recoveries/write offs Nil Nil – Closing balance 6,978 6,978

● Non-Performing Investments : Nil (Previous Year: Nil)● Provision for Non-Performing Investments : Nil (Previous Year: Nil)● Movement of provisions for depreciation on investments

(Rs. ‘000) Particulars 31-Mar-12 31-Mar-11

Opening balance 30,203 74,706 Add: Provisions made during the year 39,621 Nil Less: Write-off/write-back of excess provisions during the year Nil 44,503 Closing balance 69,824 30,203

5. Credit risk: Disclosures for portfolios subject to the standardised approach Qualitative disclosuresThe Bank adopts the following basis:● All exposures to scheduled banks for the purpose of Pillar 1 calculation, have been applied a 20% risk weight, since these

exposures are made to counterparty banks having capital adequacy ratio of 9% and above.● Ratings for foreign banks have been sourced from Standard & Poor’s.● Where the obligors have obtained rating of the facility from any of the accredited credit rating agencies specified by the Reserve

Bank of India, the Bank has applied the risk weights relevant to the ratings assigned by the credit rating agencies. Further, where the long-term rating is worse off than the short term rating and vice-versa, the Bank has applied the most conservative risk weight across the portfolio.

● Where the obligors have not obtained a rating, the exposure are taken as unrated and appropriate risk weights applied.

Quantitative disclosures● Gross Credit Exposures # (Rs. ‘000) Fund-Based 31-Mar-12 31-Mar-11

Below 100% risk weight 99,344,047 80,148,304 100% risk weight 61,109,350 57,261,465 More than 100% risk weight Nil Nil Deducted Nil Nil

Total 160,453,397 137,409,769




Non-Fund Based* 31-Mar-12 31-Mar-11

Below 100% risk weight 147,872,606 126,451,528 100% risk weight 47,504,041 36,538,261 More than 100% risk weight 254,375 Nil Deducted Nil Nil Total 195,631,022 162,989,789

# Un-realized gains on derivative instruments are considered on a gross basis in arriving at the credit exposure, which are presented net of un-realized losses product-wise under “Other Assets” or “Other Liabilities” on the Balance Sheet.

* Includes market as well as non-market related exposures6. Credit risk mitigation: disclosures for standardised approachesQualitative disclosuresIn determining credit risk capital the Bank has not reduced the facility amounts by any corresponding eligible collateral amount in the form of cash margins. The Bank assesses the credit facility based on the future projection of the cash flows, financial soundness, and liquidity profile and repayment capacity, of the potential/ existing clients. The Bank lays more emphasis on cash flow of the client and not on the units, stocks or assets mortgaged/pledged by the client. Hence conservative view is taken by not reducing the collaterals.Further, credit portfolio also includes responsibility credit (R-credits) which are used to offer credit facilities to subsidiaries and affiliates of existing credit takers that are located in areas served by credit jurisdictions other than one serving the parent entity and are unable to access credit facilities without parent support. Here the facility is provided to the Indian borrower on the support of the parent credit taker. These are secured by corporate guarantees from the parent companies or standby letter of credit from the concerned branches. The risk weighted assets are computed based on the gross outstanding facility amount.Quantitative disclosuresThe Bank has not availed of Credit Mitigation Techniques as at 31st March 2012.7. Securitisation: disclosure for standardised approachQualitative disclosuresDuring the year ended March 31, 2012, the Bank has invested in Pass Through Certificates (PTC’s) of third party originated securitisation transactions.Rating of securitisation exposures:Bank has used the ratings obtained from the external credit rating agencies in order to compute the risk weighted assets on the securitisation exposures

Quantitative disclosures (Rs. ‘000) Banking Book 31-Mar-12 31-Mar-11 (a) Total amount of exposures securitised by the bank Nil Nil (b) For exposures securitised losses recognized by bank during current period broken by exposure type Nil Nil (c) Amount of assets intended to be securitised within a year Nil Nil (d) Of (c), amount of assets originated within a year before securitisation Nil Nil (e) Total amount of assets securitised and unrecognized gain or losses on sale by exposure type Nil Nil

(f) The aggregate amount of on-balance sheet and off-balance sheet securitization exposures* purchased and break-up by exposure type is given below:

(Rs. ‘000) Nature As at 31-Mar-12 As at 31-Mar-11 Exposure Type Exposure Amount Exposure Type Exposure Amount On Balance Sheet Vehicle/ Auto Loan 2,538,446 Nil Nil Off Balance Sheet Nil Nil Nil Nil Total 2,538,446 Nil

* Represent investment in PTC’s of third party originated securitisation transactions




g) Break-up of securitization exposures purchased and the associated capital charge by risk weight bands: (Rs. ‘000) As at March 31, 2012

Risk Weight Bands Exposure Risk Weighted Assets Capital Requirement Below 100% risk weight 2,538,446 507,689 50,769 100% risk weight Nil Nil Nil More than 100% risk weight Nil Nil Nil Total 2,538,446 507,689 50,769

(Rs. ‘000) As at March 31, 2011

Risk weight Bands Exposure Risk weighted assets Capital Requirement

Below 100% risk weight Nil Nil Nil 100% risk weight Nil Nil Nil More than 100% risk weight Nil Nil Nil

Total Nil Nil Nil

h) Exposures that have been deducted entirely from Tier 1 capital, credit enhancing I/Os deducted from total capital, and other exposures deducted from total capital: Nil (March 31, 2011 : Nil)

(Rs. ‘000) Trading Book 31-Mar-12 31-Mar-11

(a) Aggregate amount of exposures securitised by bank for which bank has retained some exposures and which is subject to market risk approach Nil Nil (b) Aggregate amount of : – on-balance sheet securitisation exposures retained or purchased broken down by exposure type; and Nil Nil – off-balance sheet securitisation exposures broken down by exposure type Nil Nil (c) Aggregate amount of securitisation exposures retained or purchased separately for: – securitisation exposures retained or purchased subject to Comprehensive Risk Measure for specific risk; and Nil Nil – securitisation exposures subject to the securitisation framework for specific risk broken down into different risk weight bands Nil Nil (d) Aggregate amount of: – the capital requirements for the securitisation exposures, subject to the securitisation framework broken down into different risk weight bands Nil Nil – securitisation exposures that are deducted entirely from Tier 1 capital, credit enhancing I/Os deducted from total capital, and other exposures deducted from total capital (by exposure type) Nil Nil

8. Market risk in trading bookQualitative disclosuresMarket RiskMarket risk is defined as the risk of losses in on-balance sheet and off-balance sheet positions arising from movements in market prices. The market risk positions subject to capital charge requirement are:(i) The risks pertaining to interest rate related instruments and equities in the trading book; and(ii) Foreign exchange risk throughout the bank.

The minimum capital requirement is expressed in terms of two separately calculated charges:● “Specific risk” charge for each security, to protect against an adverse movement in the price of an individual security owing

to factors related to the individual issuer.● “General market risk” charge towards interest rate risk in the portfolio, where long and short positions in different securities

or instruments can be offset.




The general market risk charge captures the risk of loss arising from changes in market interest rates. The capital charge is the sum of four components:

● the net short/long position in the whole trading book;

● a small proportion of the matched positions in each time-band - vertical disallowance;

● a larger proportion of the matched positions across different time bands - horizontal disallowance, and

● a net charge for positions in options.

The general market risk charge is measured by using the modified duration method.

Capital charge for market risk in foreign exchange open position is at 9%.

The option risk is the sum of capital charges arising from delta risk, gamma and Vega risk.

Quantitative disclosures (Rs. ‘000) Particulars 31-Mar-12 31-Mar-11

Capital requirements for: Interest rate risk – general market risk 3,682,750 5,932,822 – specific risk 313,254 221,093

Equity position risk – general market risk Nil Nil – specific risk 90 90

Foreign exchange risk 600,000 400,000

Total 4,596,094 6,554,005

9. Operational risk

Operational Risk: It is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This definition includes legal risk.

Operational Risk Events: Inadequate or failed internal processes, people, systems and external events may result in unexpected or undesired consequences including a financial loss, an unexpected gain, a near miss and/or an opportunity cost (lost future revenue). The events associated with these unintended and/or undesired consequences are termed as operational risk events.

Operational Loss: An operational loss is the recorded financial consequence (excluding insurance reimbursements or tax effects) resulting from an operational loss event, including all expenses associated with an operational loss event except for opportunity costs, foregone revenue, and costs related to risk management and control enhancements implemented to prevent future operational losses. Operational loss events can also result in unintended financial gains. Bank of America Corporation (BAC) classifies operational losses using the Basel II categories and definitions: Internal Fraud; External Fraud; Employment Practices and Workplace Safety; Clients, Products, and Business Practices; Damage to Physical Assets; Business Disruption and System Failures; and Execution, Delivery, and Process Management.

BAC manages the operational risks of its business activities using the enterprise-wide Operational Risk Framework. Enterprise-wide Operational Risk policies, processes, tools, and standards are established by Corporate Operational Risk – COR (Global Function) and implemented by the Lines of Business (LOBs)/Enterprise Control Functions (ECFs) with oversight from the Independent LOB/ECF Risk Teams ( Regional Function). Each have a quality assurance role and through direct action or oversight, these stakeholders are collectively responsible for execution of the Operational Risk Program requirements, achievement of risk management objectives, and ensuring timely action is taken in response to concerns and issues.

Governance of Operational Risk

Governance of BAC’s operational risk is accomplished through formal oversight by the Board of Directors (the Board), the Chief Risk Officer (CRO) and through LMT and risk oversight groups aligned to the BAC’s overall risk governance framework and practices.




Risk Management Process The BAC Operational Risk Management Program – Enterprise wide includes processes for identification, measurement, mitigating, controlling, monitoring, testing, reviewing and reporting operational risk information to management and the Board. This is implemented through 1) Risk and Control Self Assessment (RCSA), 2) Operational Risk Appetite, Key Risk Indicators (KRIs), 3) Scenario Analysis, 4) Operational Loss Event Data, 5) External Operational Loss Events, 6) Issues Management Process, 7) Quality Assurance (QA) & Validation Framework. Certain elements of bank’s operational risk program may only be performed at global level and/or at regional level. The results, relevant to Branch are shared with management committee.

10. Interest rate risk in the banking book (IRRBB)Qualitative DisclosureInterest Rate Risk in the Banking Book (IRRBB) represents the banking book’s exposure to adverse movements in interest rates. Client facing activities, primarily lending and deposit taking, create interest rate sensitive positions on the balance sheet. This exposes the Bank to risk from changes in interest rates. These assets and liabilities essentially reside in the banking book.

IRRBB is measured using both earnings perspective (traditional gap analysis) and economic value perspective (duration gap analysis).

Earnings perspective (traditional gap analysis): measures the sensitivity of net interest income to changes in interest rate over the next 12 months. It involves bucketing of rate sensitive assets and liabilities in the banking book as per residual maturity/re-pricing date in various time bands and computing change in net interest income change over a one year time horizon for 200 basis points upward and downward rate shocks.

Economic value perspective (duration gap analysis): measures the changes in the Market Value of Equity of the Bank for a 200 basis points upward and downward rate shock. It involves bucketing the interest rate sensitive assets and liabilities as per residual maturity in various time bands and computing the Modified Duration Gap (MDG). The MDG is used to evaluate the impact of the upward and downward rate movement on the Market Value of Equity of the bank.

Quantitative disclosures:The increase/(decline) in earnings and economic value (on a pre-tax basis) for an upward/downward rate shock of 200 basis points, broken down by currency are as follows:

Earnings Perspective (impact on net interest income): (Rs. ‘000) Currency If Interest rate were If Interest rate were to go down by 200 to go up by 200 basis points basis points INR (168,934) 168,934

USD (24,452) 24,452

Others 5,277 (5,277)

Total (188,109) 188,109

Economic Value Perspective (impact on market value of equity):(Rs. ‘000)

Currency If Interest rate were If Interest rate were to go down by 200 to go up by 200 basis points basis points INR (457,512) 457,512

USD (142,984) 142,984

Others (30,774) 30,774

Total (631,270) 631,270

BANK OF AMERICA, N.A. (INDIA BRANCHES)

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